Do I Still Owe Payments on My Ex-Spouse’s Car?

Many people are surprised to learn that, even after divorce, they can still be responsible for car payments on a vehicle their ex-spouse drives. Watching your credit and finances remain at risk, despite believing your obligations ended with the marriage, can feel overwhelming and lead to unexpected legal questions about your rights and obligations.

If left unresolved, this financial link can follow you for years. Missed payments by an ex can hurt your credit, trigger collection efforts, and lead to possible repossession. These consequences add ongoing hassle and make it harder to fully move forward after divorce.

“I was kept well informed on all aspects of my case! I could not be happier with the representation that I was provided! 100 percent recommend….” — Adam T.

Randall, McClenney, Daniels & Dunn, PC understands these challenges. Our property division attorneys work to protect your interests, pursue practical solutions, and help you reduce unwanted financial situations. Contact our firm to discuss your options and safeguard your financial future.

How Virginia Divorce Courts Handle Auto Loans in Property Division?

In Virginia, divorce requires the equitable rather than equal division of assets and debts. This includes determining ownership and payment responsibility for auto loans and vehicles. Resolution options may include selling the vehicle, transferring ownership, or establishing an alternative agreed-upon plan.

Under equitable distribution, the court divides marital assets in a fair manner after weighing multiple factors, not necessarily splitting them 50/50.

A vehicle purchased during the marriage with marital funds is typically considered marital property. Vehicles acquired before the marriage or kept entirely separate may be excluded in certain circumstances. The court considers:

• When the vehicle was acquired
• How it was acquired
• The length of the marriage
• Contributions made by each spouse
• The vehicle’s current value

These and other factors guide the court in determining a fair division.

How Auto Loans Are Addressed in Virginia Divorce Settlements?

In Virginia, debts incurred during the marriage are generally presumed to be marital, including an auto loan for a vehicle purchased during the marriage. However, the court can classify a debt as separate if it clearly benefited only one spouse or was unrelated to the marriage. When the court awards a vehicle to one spouse in the property division, that spouse is typically assigned responsibility for the loan.

Courts often award the vehicle to the spouse who primarily uses it and may allow a period for that spouse to refinance the loan or otherwise hold the other party harmless. The length of this period depends on each person’s financial capacity. This approach follows Virginia’s equitable distribution principles under Virginia Code § 20-107.3, which requires the court to consider factors such as the nature of the debt, each party’s contributions, and the overall division of assets and liabilities.

If payments stop in violation of a court order (including an incorporated separation agreement), you can file a rule to show cause. Depending on the circumstances, the court may order payment of attorney’s fees, impose fines, or, in rare cases, order incarceration for noncompliance.

Divorce Decrees vs. Lender Requirements in Virginia

In Virginia, a divorce decree does not override the loan terms of a lender’s contract. Even if the court assigns a car loan to one spouse, the lender can still hold both borrowers responsible until the loan is refinanced or fully paid. This is because the lender is not a party to the divorce case and is bound only by the original loan agreement.

This reality can affect your credit score, ability to qualify for a new loan, need for a cosigner, and the interest rates offered to you in the future. To protect your financial standing, it is important to address outstanding auto loans during the divorce process and to consider refinancing or other strategies to remove one party from the debt.

Why Your Divorce Decree Should Address Car Loans Clearly

Because lenders are not bound by divorce decrees, it is important to include clear terms in your divorce decree or marital settlement agreement regarding any auto loan. These terms should specify:

• Who will retain ownership of the vehicle
• Who is responsible for making monthly payments

Clear language can help protect both parties from future disputes and make it easier to pursue enforcement if the responsible party fails to pay. Without these terms, both spouses may remain liable to the lender even after divorce.

How a Joint Car Loan Can Affect Your Credit and Liability After Divorce

Even if your divorce decree assigns the vehicle and loan to one spouse, both borrowers remain legally responsible to the lender until the loan is paid off or refinanced. The decree is an agreement between the spouses and does not change the lender’s rights under the original contract.

A family law attorney at Randall, McClenney, Daniels & Dunn can help you protect yourself by:

• Negotiating hold harmless provisions to reduce your risk
• Negotiating surrender or sale terms if payments are missed
• Pursuing enforcement through a contempt of court action if the other party fails to pay

Risks and Consequences of Leaving a Car Loan Unresolved After Divorce

If a current loan is not fully resolved during the divorce process, there is a risk of the following:

• Your credit report and credit score can be negatively impacted if payments are missed. This applies to both parties, no matter who is responsible for payment. This can lead to bad credit and difficulty obtaining a new car loan in the future.
• The lender can repossess the vehicle if it is not paid. That means the car can be seized and sold, and you may still owe a deficiency balance of the remaining loan amount plus fees minus whatever the lender recovers from the sale.
• Ongoing financial ties can create stress and legal complications long after the divorce.

Steps to Get Your Name Removed From a Car Loan After Divorce

You can take several steps to remove your own name from a joint car loan and reduce the risk of being held responsible for missed payments.

1. Review Your Divorce Decree and Auto Loan Agreement

Carefully review both documents to understand your rights and obligations. If the decree is vague or incomplete, discuss possible revisions or enforcement options with your attorney.

2. Contact Your Lender

Ask your lender about its process for removing a co-borrower or cosigner. In most cases, the lender will require the loan to be refinanced or paid off before a name can be removed.

3. Refinance the Loan

Refinancing creates a new loan in the responsible party’s name and pays off the existing one. Whether you’re the primary borrower or co-borrower, the lender can pursue either of you until the loan is refinanced or paid in full.

4. Transfer the Title

File a vehicle title transfer through the Virginia DMV to reflect new ownership. This can help reduce certain ownership-related liabilities (such as personal property tax or tickets) for the non-owner. However, changing the title does not remove anyone from the loan. Unless the lender approves a refinance, loan assumption, or payoff, both borrowers remain fully liable for repayment under the original loan contract.

An attorney at Randall, McClenney, Daniels & Dunn, PC can guide you through these steps, help you negotiate with the lender, and work to protect your credit while resolving the loan.

What to Do if the Other Party Refuses to Cooperate

If your ex-spouse refuses to cooperate with transferring ownership or refinancing the vehicle, you may remain legally responsible for the loan until it is paid in full under the original contract terms.

In this situation, speak with an attorney at Randall, McClenney, Daniels & Dunn as soon as possible. We can review your divorce decree, explain your enforcement options, and, when appropriate, file legal actions to protect your financial interests. Taking action early can help prevent credit damage and limit ongoing financial risk.

Why Hire a Lawyer for Auto Loan Issues in Divorce?

When a car loan is involved in a divorce, the financial and legal stakes are high. An experienced family law attorney can protect your interests by:

• Communicating directly with lenders to explore refinancing options or cosigner releases.
• Drafting clear and enforceable divorce decree language that specifies loan responsibility and title ownership.
• Filing enforcement actions if the other party fails to make payments, so you do not have to confront your ex-spouse directly.
• Advising on strategies to protect your credit and limit your liability for joint debt.

At Randall, McClenney, Daniels & Dunn, PC, we work to remove the stress of dealing with loan disputes so you can focus on moving forward. Our attorneys guide you through each step and take on the legal challenges for you.

Frequently Asked Questions

What Should I Do if My Ex-Spouse Stops Making Payments on Our Joint Car Loan?

If one party stops making payments despite a separation agreement or court order, the other party can file a “rule to show cause.” Judges may impose penalties, including attorney’s fees or incarceration, depending on the circumstances. In cases where a party cannot refinance or make payments due to poor credit history, judges may give additional time to comply or consider alternative remedies. However, they may impose strict deadlines and consequences for willful non-compliance, which in rare cases can include incarceration. Virginia courts generally reserve jail for situations where a person can comply but refuses to do so.

Who Decides Which Spouse Keeps the Car in a Virginia Divorce?

The court decides vehicle ownership as part of equitable distribution under Virginia Code § 20-107.3, considering factors such as when and how the car was acquired, its current value, and each spouse’s contributions.

How Can I Remove My Ex-Spouse From a Joint Car Loan?

You can only remove a co-borrower with lender approval. This is typically done by refinancing the loan in one person’s name, obtaining a cosigner release, or paying off or selling the vehicle to discharge the debt.

Why Clients Choose Randall, McClenney, Daniels & Dunn, PC

At Randall, McClenney, Daniels & Dunn, PC, we understand that divorce and property division can affect every part of your life and your ability to move forward. Our family law attorneys approach each case with a focus on practical solutions that protect your rights and financial future.

Our goal is to give you the information, strategy, and advocacy you need to make informed decisions and achieve a resolution that positions you for a stable future.

Testimonials

“I would highly recommend this law firm to anyone in need of legal services. From calling to inquire and set up an appointment, to meeting with the staff to assist me — it was all a very smooth process. They are true professionals that understand their clients, and extremely knowledgeable. They make sure you receive the best service, and I am truly grateful for everyone at this law firm that assisted helping me get the best outcome.” — Anna R.

“Communications with this firm was as noted, responsive and very professional…was very satisfied with the handling of my case. The end result was far better than I expected. Very appreciative and would certainly highly recommend” — Gregory D.

Protect Your Finances in a Virginia Divorce

If a car loan is tying you to your ex-spouse, now is the time to take action. The family law attorneys at Randall, McClenney, Daniels & Dunn, PC can explain your rights, negotiate loan and title changes, and pursue court enforcement when needed. We work to protect your credit, reduce financial risk, and help you move forward with confidence.

Call 757-742-6115 or fill out our contact form to schedule a consultation with an experienced Virginia divorce lawyer today.