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Dealing with the Car in a Divorce

Divorce brings up many issues and how to address each one. One very common issue is a car. The value of the car is usually determined at the time of the distribution and usually does not have significant value in most cases. Like other assets, it is the value of the car less any liens or loans on the car. Kelly Blue Book is often used to determine the value of the car. The person who keeps the car is responsible for the loan on the car regardless of whose name the loan is in at the time. In some cases, an indemnification clause can be added to the order or agreement whereby the party who keeps the car is responsible for the loan and if they fail to pay, the other party can seek recourse. In some cases, if the party driving the car is owed support, the other side may agree to deduct the amount of the loan payment from the support. Once the loan is paid off, it is important to include language regarding the transfer of the title. If one party is not agreeable to keep the loan in their name while the other party drives the car, then oftentimes, the balance of the loan can be paid off from other assets such as the refinance or sale of the home. In addition to being responsible for any payments on the car, whoever is in possession of the car is also responsible to keep the car insured. If the other side is paying the insurance if the vehicle is in their name, it will be credited back to them in either support or the divorce. Keep in mind that in a divorce, usage of the property oftentimes determines responsibility for payment of expenses.

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