Car Ownership and Divorce in Texas

Are you concerned about an upcoming divorce? It is very common to have major questions regarding the subject of divorce. It is a complex and emotionally driven topic. With that said the attorneys with the Law Office of Bryan Fagan have the resources you need to turn those questions into answers. 

Specifically, in today’s blog post, we are going to talk about car ownership and divorce. What do you need to know about your vehicle and how it will be handled in the divorce? Read on to find out more. If you have any questions about the content of this blog post, contact the Law Office of Bryan Fagan for a free-of-charge consultation with one of our attorneys.

Why is car ownership important to your Texas divorce?

Understanding how car ownership and divorce are related is an important lesson to learn. Car ownership has to do with not only your freedom of movement but also how Texas law handles an important asset in your life. Additionally, since many of us have debt on our vehicles the subject of debt division also becomes relevant. For those of you who may be in a situation where more is owed on your vehicle than what it is worth then this is an especially important topic. Wanting to remain financially solvent despite the financial hardships of a divorce is a worthwhile goal to have.

Texas as a community property state

Every state in the country has different laws regarding the division of property in debt at the time of divorce. Texas is no exception. Texas adheres to principles of community property when dividing marital debt and assets. When it comes to car ownership and divorce, this is important as far as when the car was purchased. For instance, if your vehicle was purchased during the marriage then it is likely to be community property. This means that no matter who drives the vehicle or whose income was utilized to purchase the vehicle, it may be divisible in your divorce.

As we just mentioned, debt is also divisible in divorce. This is an important factor to bear in mind. Many times, it is easy to glaze over marital debt in favor of paying attention to marital property. While it may be more pleasant to think about property than debt it is still important to discuss debt. Specifically, if you owe money on your vehicle then you will need to have a plan on how to handle the debt. Oftentimes even if you could be awarded the vehicle you may not be able to afford the payments on your own.

Today’s blog post from the Law Office of Bryan Fagan is important for you no matter if you want to keep your vehicle or if you do not. What you will find when it comes to divorce is that the division of property and debts is like moving poker chips on a table. There are several different ways to stack your chips and to divide them up between you and your spouse. The way that you ultimately determine how your property and debts should be divided will depend upon your circumstances and the impact of the law on your life.

Complexities surrounding separate property vehicles

The world of car ownership and divorce in Texas becomes more complex when you consider that your vehicle may be separate property. Separate property is any property that is owned before your marriage. Imagine a situation where you bought your truck two years before you got married. If you can prove the purchase date of the vehicle if you and your wife get divorced then it would be straightforward to show that this vehicle is separate property. As a result, you would likely have the evidence necessary to overcome the presumption in favor of property being community-owned during a divorce.

However, the situation becomes murkier when you consider the concept of reimbursement. Reimbursement comes up in Texas divorce cases when the community estate is used to contribute to the separate property of you or your spouse. In this instance, if community income was utilized to pay the car payments on your truck, then your wife may be due reimbursement. However, how much community income was utilized to pay the note on your truck would need to be determined. Likely half of that community income would then need to be put back into the community estate.

As you can tell, the situation can become more complex than you otherwise would have thought. While the subject of community versus separate property can be simple enough to diagnose the circumstances become more difficult to analyze when you consider the concept of reimbursement. In this type of situation, it is best to rely upon the advice and perspective of an experienced family law attorney. The attorneys with the Law Office of Bryan Fagan have walked through this issue with clients on many occasions. We know what it takes to when for our clients both inside and outside the courtroom.

Factors used by a court when dividing a vehicle

The relevant factors used by a court when it comes to car ownership and divorce are many. Family law cases are determined in part by the law as well as your circumstances. First, a court attempts to divide property equitably. Equity is another word for fairness. However, bear in mind that fairness does not necessarily indicate that property will be divided equally. Rather, fairness in this case takes into consideration the different circumstances relevant to the life of your family.

The financial circumstances of you and your spouse will be examined. For instance, if one of you earns much more money than the other then the spouse who earns less may be awarded more property in the community estate. Keep in mind that separate property in a divorce cannot be divided. The lower-earning spouse may receive the vehicle so long as the payment can be afforded by that person. This is because it would be arguably easier for a higher-earning spouse to go out and purchase a vehicle.

Next, a court with the two whether the vehicle is suitable for the transportation of children. Consider a situation where your wife is the primary caretaker of the children. In a situation like that, if the vehicle in question is a passenger van and you have a large family then it would make sense for your spouse to be awarded the van in the divorce. Since you are only one person, and the children do not live with you primarily then the vehicle may go to your spouse in the divorce. It may be possible or even likely that you would be responsible for paying the loan on a vehicle that you do not drive. 

How are car loans handled in a divorce?

Let’s say that you and your spouse purchased a new car last year during your marriage. You put some money down as a payment, but you also financed the purchase of the remaining value of the vehicle. Now that you are moving forward with a divorce the question arises as to who gets the vehicle. Additionally, it also becomes relevant to ask who will be paying the loan on the car. To answer that question, we will walk through the factors that are relevant.

First, since the vehicle was purchased during your marriage it is likely to be community property. Assuming that no inherited money or gifted money was used to purchase the vehicle it does need to be divided in the divorce. Let’s further assume that both you and your spouse can afford the car payment on your own. If you are awarded the vehicle, it is also likely that you will be awarded the loan on the vehicle. This makes sense given that you received the benefit of being able to use the vehicle.

However, even if you are awarded the vehicle and the loan that does not mean that your spouse is off the hook. For instance, if the loan lists you and your spouse as borrowers then she would still be responsible for any missed payments of yours on the car loan. That means that if you fall behind on the loan her credit rating may take a hit in the future. For this reason, it is important to have an attorney that comes to car ownership and divorce. The attorney can guide you when it comes to negotiating over an asset and debt related to a vehicle.

Selling the vehicle because of the divorce

Your vehicle may also be sold as part of the divorce. From the outset of your case, it is best not to take any major financial steps. You may be prohibited from selling the vehicle without the court’s permission based on your temporary orders. Temporary orders are instituted from the beginning of your case and extend through the end of your divorce. These temporary orders attempt to restrict your behavior to ensure that you and your spouse are each treated fairly. Major financial decisions should generally be put off until you have court orders.

Either by agreement or court order, you and your spouse may sell your vehicle because of the divorce. What this means is that additional orders would need to be created as far as agreeing to a sale price, manner of negotiation, and division of proceeds from the sale. Someone would have to be responsible for ensuring that the car loan is paid by the sale of the vehicle. This can all be done either by order of the court or through settlement negotiations.

Selling the vehicle eliminates the chance that debt plays a role. For the most part, so long as what is owed on the vehicle is less than the sale price you will be able to eliminate that debt and move on from there. Considering the used car market these days this may be an attractive option for many people. However, you will need to consider the specific circumstances that you find yourself in. Much of the time it is better to stay in a reasonably priced vehicle even if there is a car loan attached to it.

How significant are issues related to car ownership and divorce?

In your divorce, car ownership may not be a major topic. Consider a circumstance where you and your spouse both drive a vehicle that is suited to your needs. Your SUV suits you because it allows you to transport your children to and from school as well as their extracurricular activities. On the other hand, your spouse may have a work truck that he uses for his contracting business. That neither of you owes any money on your vehicles makes this an even more straightforward situation.

On the other hand, let’s suppose that we have a more complex situation involving the vehicles. The need for reimbursement, being upside down on the car as far as what is owed versus what it’s worth and the topic of cosigners on the loan can all complicate this subject further. What many people do not understand is that in relatively simple divorces the vehicle may end up being the most complex issue to discuss. In our hypothetical situation above, those spouses likely have retirement assets, a home, and other debts to divide. In this one your vehicle may be the most important issue that you all discuss.

Your vehicle is not at the top of the priority list in most divorce cases. The main reason is that there are other assets and debts that take precedence. With that said, if you do not own any other property then issues regarding the vehicle take center stage. Determining how to move forward with a division of any community property vehicle takes careful planning. Working with an experienced Texas family law attorney can be the best way to avoid unpleasant circumstances that can delay your divorce.

Do you always need an attorney for your divorce?

This is one of the most frequently asked questions of the attorneys at the Law Office of Bryan Fagan. You don’t need to hire an attorney in your divorce case. Many people divorce every day without a lawyer. There is nothing in the Texas family code that requires you to hire an attorney. With that said, there are advantages to having an attorney. Let’s spend some time discussing why you may want to consider hiring an attorney for your Texas divorce.

Car ownership and divorce are frequent topics in a family law case. The best manage the issues related to car ownership and divorce you should consider the rest of your case first. Do you have children? Are there other assets and debts that need to be divided besides the vehicle? If the answer is no to both of those questions, then you may be able to avoid hiring an attorney for your case. Simply put, the stakes in your case may be low enough that not hiring an attorney will not largely harm your case.

On the other hand, any case involving children or the need to divide property more significantly than a vehicle likely indicates the need to hire an attorney. Attorneys do not make decisions for you in a divorce. Rather, attorneys help guide clients to the best of their ability. The attorneys with the Law Office of Bryan Fagan know that it is stressful to go through a divorce. Ultimately, our attorneys work every day to ensure the best possible outcomes for our clients. Talk to us about how to move forward in your case.

Final thoughts on car ownership and divorce

Thank you for joining the Law Office of Bryan Fagan. Our attorneys have the experience that you need to succeed in a divorce case. There is more to consider than just car ownership. As with any family law case, car ownership needs to be balanced against the other relevant topics. 

Do you have a list of concerns about your divorce that you have not been able to answer? What are the topics that you are curious about or most concerned with? Reach out to the Law Office of Bryan Fagan today so that we can walk you through any subjects that you are curious about. It is best to reach out to an attorney to learn more about the answers to your questions. From there, you can act intentionally towards developing a strategy geared towards solving the major issues in your case.

Questions about the material contained in today’s blog post? Contact the Law Office of Bryan Fagan

The attorneys with the Law Office of Bryan Fagan offer free of charge consultations six days a week in person, over the phone, and via video. These consultations are a great way for you to learn more about the world of Texas family law. Before signing a document or negotiating on a subject you do not know well, contact our office. We look forward to the opportunity of serving you during an important part of your life. The Law Office of Bryan Fagan is on your side.