If one party gets a vehicle in the divorce, can the other party be held responsible by a creditor for it?

Question

My girlfriend's ex-husband got his truck in the divorce decree. She had co-signed on the truck the year before. He told her he would let it get repossessed so she would have her credit affected. The creditor is calling her about the money even though she has given them his address and phone number. How is she responsible in any way since it was awarded to him?

George Derieg · Answer

Part of the marital settlement agreement should have provided for the ex husband to either refinance to get her name off of the car, or sell the car. She should contact her divorce attorney and request a court hearing immediately.

Robert Merlin · Answer

She signed as a co-obligor for the loan. Therefore, the creditor can go after her. If that is going to happen, she should demand that the truck be turned over to her. Then she can try to sell it, if she does not want it. If her husband will not do it voluntarily, she can ask the judge to order it.

Eric Smith · Answer

The creditor negotiated the debt with a married couple and both parties co-signed for the loan. The divorce decree cannot bind third party creditors. If the decree names one party exclusively responsible for the debt (ex-husband), your girlfriend can seek damages from him via the decree, but the creditor can go after whichever they want.

Leonard A. Kaanta · Answer

She cosigned the loan, so she is liable.

Willie Stephen Graves · Answer

The creditor who is owed the money for the vehicle was not a party to the divorce case, so the creditor loses no rights against either party just because a judge gives the vehicle to one or the other.

The divorce court judge has no power to release either party from an obligation to a third party creditor; it's not the creditor's fault that two people who signed together can't get along.

The creditor can still look to either or both of the people who signed the note. Sorry for the bad news.

Clayton Lockhart · Answer

The creditor doesn't care what the divorce decree says. As far as the creditor is concerned, they still have a contract (an enforceable contract) with her because she co-signed for the vehicle. The only way for her to get her name off that vehicle is for it to be refinanced. If the vehicle got repossessed, the creditor can resell it and she would then still be on the hook for the deficiency that is owed the creditor under the contract.

Timothy Lopez · Answer

A third party creditor is not obligated to modify the terms of a loan based upon a settlement agreement between the two people who signed the loan agreement with the creditor. They are, from the creditor's view, jointly and individually responsible.

Melvin Franke · Answer

It depends upon the language of the divorce judgment

Gregory Crain · Answer

She has a contract with the creditor.

Dean Esposito · Answer

If she co-signed, the creditor can pursue her for payment. She will have to file a motion with the court requesting that her ex-husband pay all notes and reimburse her any amounts she may have paid or, in the alternative, award her the vehicle.

Gary Russell · Answer

A divorce only resolves property issues between the two parties (husband and wife).  A divorce court has no authority to involve third party creditors or affect their rights.  

If your wife co-signed the auto loan with her ex, then she promised to be responsible for the debt if he was not.  

Even though the judgment of divorce might say the ex is responsible for the debt on the truck, that is only between the ex and your girlfriend.  

The creditor has every right to collect from your girlfriend if the ex does not pay.  Her only legal remedy is to haul the ex back into court for contempt for failure to follow the judgment, assuming the judgment states that he is responsible for that debt.

Loren Zahn · Answer

Yes. Divorce agreements are not binding on third parties. That said, if the creditor is able to collect from your friend, then the divorce order should allow for her to obtain reimbursement from the ex. That said, her credit will be harmed if she doesn't take over payments.

Nancy Harkess · Answer

In a community property state, like Nevada, the assets acquired during the marriage belong to both spouses, and so do the debts. Even though a divorce decree states that one party is responsible for a particular debt that was incurred during marriage, if the payments are not made, the creditor can and will go after both parties. But, all is not lost. You can file a motion to enforce the divorce decree. If noncompliance is proven, the judge could charge the noncompliant party with contempt of court.

Harry Roth · Answer

Yes. If you are married and sign a financing contract of any sort, or borrow money, including making credit card charges, the bank that loaned the money has a relationship with both spouses. 

The bank did nothing wrong when loaned the money and the bank has the right to look to both of its borrowers for repayment.  The dirty dog here is not the bank; it is the former husband.

Part of the deal in getting the truck was that he would pay for it. If he is not paying, then your girlfriend can go back to court and ask the judge in the divorce case to move the truck AND the loan over to her side of the ledger. If she can do so and not jeopardize other obligations, she could make the payment for one or two months until she can get into court and get the order for the truck (and for reimbursement of the payments she made).

Retaining joint debt at the end of a marriage is often problematic but inevitable. At least it is only a car and not a house.

Grady Gauthier · Answer

If the car was awarded to him in the divorce judgment so is the debt that goes with it.  She should send a copy of the divorce judgment denoting his ownership for the car to the creditor.  If necessary you may want to consult with an attorney for assistance with this matter or to file a petition with the court regarding the ex-husband's seemingly retaliatory actions.

Mark Brown · Answer

A spouse who is a co-obligor on a bank loan remains legally responsible to the bank.  The award to one spouse of the asset that has been posted as security for the loan (e.g., the truck) does not release either spouse from the loan nor otherwise modify the loan agreement.  

The court does not have the power to affect the bank's rights or to change the terms of the loan agreement because the bank is not a party to the divorce.  Both spouses remain jointly liable to the bank.

Kollin Rice · Answer

A divorce only affects the rights of the parties to the case. A third-party creditor is not bound to the terms of the divorce, and if both spouses are on the car loan before the divorce, they will both be on it after the divorce unless it is refinanced to remove one of them. If the spouse who is not supposed to pay the loan gets garnished by the creditor, they would be normally be entitled to seek repayment from the spouse who was supposed to pay the bill.

Michael Yeksavich · Answer

If she co-signed the creditor can come after her.

John Kirchner · Answer

If she is a signatory to the original loan, she remains liable to the lender regardless of the fact that the ex-husband was awarded the vehicle in the divorce.  If the divorce was handled correctly, she should be able to go after the ex-husband for anything that she is forced to pay the lender, but she still liable to the lender.

Frances Headley · Answer

Yes, even though the asset was given to him in the dissolution the creditor can look to either debtor.  Her only recourse is to take him back to court.  She should consult a family law attorney about the possibility of contempt since he seems to have willfully disobeyed the court order.

Bernal Ojeda · Answer

Yes, as a cosigner.

Michael Edwards · Answer

Even if the vehicle was awarded to her ex-husband, that does not determine whether or not the creditor can come after her for payment.  You see, the divorce decree on determines the respective rights of the parties.  It cannot effect the rights of third parties who are not involved in the divorce, like the creditor.  Since your girlfriend co-signed for the vehicle loan, the creditor is fully within their rights to come-after her for that debt.  Your girlfriends only proper legal remedy is to pay the debt, then file a motion for order to show cause, asking the divorce judge to hold her ex-husband in contempt of court for failing to pay the debt that he was supposed to pay.  I wish I had better news for you, but that is the truth. If your girlfriend cannot afford to pay the debt, her only other potentially viable option is bankruptcy.  She should probably get more specific advice from a good divorce attorney, and decide how she is going to proceed.  Good luck!

Rhonda Ellifritz · Answer

A divorce decree does not affect third party creditors.  I find this an explanation many family law attorneys do not completely explain or protect their clients against.  

The creditor loaned to both, with their permission, and can now go against either one or both.  They are not bound by the order involving only him and her.  She can go to court to request reimbursement, but you can't get blood out of a turnip.

Steven Alpers · Answer

Any one on the loan is responsible for its payment. Creditors are not part of the divorce so they are not bound by a divorce agreement. He can be taken back to the divorce court to get him ordered to pay her back or if money is still owed to give her the car and paid back for any payments she has made.

Leonard Schwartz · Answer

Even though the vehicle for awarded to the husband the wife is not relieved of responsibility as a co-signer. He may have agreed to hold her harmless and she may sue him to recoup what she pays but the lender has nothing to do with that agreement.

Barbara A. Fontaine · Answer

Your friend should file a Motion in Family Court where she got the divorce. As a cosigner, you are supposed to pay if the main signer does not, so the car company can try to get you to pay. You need the Court's help.

Dennis P. Mikko · Answer

A divorce only affects the rights of the parties to the divorce.  The divorce does not affect the rights of third party creditors.  In this case, since she co-signed on the loan, even though she may have a claim against her ex-husband, the creditor has a right to look to her for collection.

John Brennan · Answer

She, in fact both parties, are responsible to the creditor.  Her ex is probably responsible to her under the divorce decree, and she will have to go back to court to enforce that.  If the truck is not paid and repossessed it will effect her credit rating and be her liability regardless of the fact her ex was to pay for it under the decree. She needs an attorney and legal help.

Glenn Tanner · Answer

The decree of dissolution effects the rights between spouses. It doesn't change anyone's rights in regards to creditors.

If she's to pay for a vehicle (the decree should divide all debts) and she doesn't, and the creditor goes after you, you can go after her. Who is awarded property may not have anything to do with who is awarded the debt.

Monica H. Donaldson Stewart · Answer

The creditor is not a party to the divorce, so they are not bound by the court's order awarding the vehicle to one party or the other; they will come after whoever's name is on the loan, regardless of the orders in the divorce. However, she may be able to ask the court to order him to reimburse her for anything she has to pay to satisfy the creditor. I recommend she consult with an attorney to discuss her options.

Robert De Groot · Answer

She signed the contract. She is responsible. However, the divorce papers should say that he holds her harmless and indemnifies her regarding the debt. This means that if they collect from her, she can collect from him.

Cassandra Savoy · Answer

If she co-signed for the debt, she is legally responsible to pay the debt.  Usually, when faced with this situation where one party can not remove the other party's name from the debt, the item is sold.  Her remedy may be affected by other clauses in the property settlement agreement.  You need to see a lawyer.

Timothy Byrne · Answer

The creditor can collect against any signor or co signor to the original note.

Austin Hirschhorn · Answer

If the judgment of divorce awarded him the truck and required him to hold his ex-wife harmless from the obligation, she may have to take him back to the court where the divorce was entered to have the indemnification agreement (if there was one) enforced.  If there was no requirement that he indemnify her from liability whatever was done in the divorce is not binding on the creditor that is owed money from the sale of the truck to your girlfriend and her ex-husband and the creditor can recover from either of them.

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If one party gets a vehicle in the divorce, can the other party be held responsible by a creditor for it?

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