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Getting your name off your spouse's car loan in a divorce

Most married couples don't think twice about co-signing a car loan with their spouses. However, that shared debt can become quite a problem after you're divorced.

A divorce decree can assign your spouse the right to keep the car and the obligation to pay the loan that goes with it — but what it says in your divorce decree doesn't have any bearing on how the bank will treat that loan in the future. If your ex-spouse falls behind on the car payments, your credit could suffer. If your ex-spouse defaults on the loan entirely, the bank can try to collect its money from you.

So, how do you get your name off your spouse's car loan? Hopefully, you're asking this question before you run into problems. Ideally, you'll start thinking about it before the divorce is final so that you have more leverage to use to force your soon-to-be ex-spouse to act.

Here are a couple of options:

1. Your spouse can refinance the loan.

If your spouse or ex-spouse has decent credit, the whole problem can be solved by simply refinancing the loan without you as a co-signer. That puts the obligation for the debt entirely on the other person.

2. Your spouse can trade the car in for another.

Your spouse may want to trade the car in for a different car and obtain new financing in the process. Again, as long as you aren't on the new loan, you won't be responsible.

3. You may be able to enact a co-signer release option.

Some loans allow a co-signer to be released from any obligation for the debt after a certain number of on-time payments. Check the loan documents that you have for the vehicle and see if there's such a clause.

4. You may be able to force your spouse to sell the car.

If the divorce decree isn't finalized, you may be able to oblige your spouse to sell the car. He or she can use any equity in the vehicle to purchase another one without you. This will only work, of course, if you owe less than the car is worth.

Dividing up the debts you've acquired in a marriage is just part of the process of divorce. An attorney can help you decide the best route to take.

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San Marcos, TX 78666

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