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When a married couple decides to divorce, they must divide their marital assets and debts through a divorce settlement agreement. This division will address real estate, automobiles, retirement accounts, investments, and so on.

In a divorce, things like automobiles and real estate can be either assets or debts depending on whether or not they are secured by a loan. If a vehicle was recently purchased, it’s often considered a debt or a liability when there’s still a loan against it.

If you’re like many spouses, you and your spouse purchased one, if not two, automobiles together. Meaning, you’re both on the auto loans and titles. In this case, you’ll have to decide who will keep which vehicle, and then you’ll have to handle the titles so only one spouse is on each title.

Transferring the Title

Let’s say you only have one vehicle in both of your names. As a part of the divorce, you’ll have to determine how you’ll be dividing your marital assets and debts. If the vehicle is paid in full, it will be an asset, but if you owe money on it, it will be classified as a debt. Either way, someone will have to sign over the vehicle to the other spouse.

It may be as simple as both of you standing before a notary public and one spouse signing over their interest in the vehicle on the title. Assuming you’re keeping the car, next you’d need to turn the title in, along with its license plates at your local PennDOT Driver & Vehicle Services. You would receive a new registration in your name, and you’d either receive new plates, or they’d let you transfer the existing plate to your name.

The Auto Loan

If you and your spouse still owe money on the vehicle, you may have to complete additional lender paperwork to complete the title transfer. As a part of the divorce agreement, you should agree to transfer the auto loan to your name only. Even if you agree to keep the car and pay the payments, the lender can still go after your ex if he or she stays on the loan and this is NOT recommended.

Related: Tips for Negotiating a Divorce Settlement

The failure to transfer the title and auto loan can lead to legal trouble, especially if it was part of your divorce settlement agreement. So, it’s wise to transfer the title and handle the loan promptly to avoid any headaches.

Contact Cairns Law Offices to learn about our $299 no-fault divorces!

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