QUESTION: I financed a car with my ex-wife. The divorce decree states that the vehicle and the debt for it are hers.
She has not been paying on the auto loan, and it is hurting my credit. Do I have any legal recourse?
ANSWER: From a credit/debt rights perspective: Notifying the lender and/or the credit bureaus that your ex spouse was given the car and the car note does NOT relieve you from the liability. Family courts and divorce-court judges cannot force the bank (not a party in the divorce lawsuit) to agree to drop you as liable on the car note. Unfortunately, most divorce attorneys do not go into that sort of detail with their clients.
The only way you can save your credit is by making the payments yourself or encouraging your ex-wife to sell the car. If you make the payments yourself, you will probably have recourse to go back to family court and demand that your ex-wife reimburse you. If you convince your ex-wife to sell the car, any deficiency between the amount owed less the amount recovered through the sale is still your liability.
I would strongly recommend you do everything in your capacity to avoid the vehicle being repossessed. From a credit/debt perspective, a repo is even worse than a late payment or two.
On another note: if the vehicle does get repossessed, you should anticipate getting notice from the lender before the car is sold. That notice is required by Texas law and you should allow a consumer rights attorney to have a look at it to determine that your rights have not been violated. The Texas Finance Code has some terrific relief (damages) for consumers when that letter following repossession is defective.
This information is provided for educational purposes only. There is no attorney-client relationship with Karni Law Firm until a contract is signed by the attorney and the client.