On behalf of Stange Law Firm, PC posted in divorce on Thursday, January 21, 2016.
When you are married, you may have numerous joint financial ties. When you decide to divorce, you need to make certain that all of those ties are completely severed. This is because when you divorce in Missouri, the divorce settlement between you and your former spouse is a contract. The important element in that contract is that it only binds you and your former spouse.
This is significant when you have a mortgage, joint loans or joint credit accounts. For many couples, two cars are standard, and most of the time, both spouses are obligated as co-signers on the loan.
During the divorce, each spouse typically receives a vehicle in the property division. While the settlement document may assign each vehicle to a single spouse, this document has no effect on the joint loan obligation.
You want to re-title both in vehicles in your separate names and pay off any loan balance that remains or obtain a new loan. If you don’t, you run the risk that your former spouse could suffer financial problems after the divorce and could stop making payments on the loan.
They could even surrender the vehicle and file a bankruptcy. This would discharge their obligation, but if you were still listed on the loan documents as a co-signer to the loan, the lender could begin collection attempts against you for the deficiency balance.
Given that divorce is one of the leading causes of bankruptcy, the best way to protect your financial health is to make sure that all joint debt and credit instruments, like credit cards, are truly separate after your divorcé is final.
Source: cnbc.com, “Breaking up is hard to do: Protecting assets in divorce,” Kelli B. Grant, January 17, 2016