Will a notarized agreement regarding a car loan hold up in court?

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Will a notarized agreement regarding a car loan hold up in court?

My wife has suddenly filed for divorce. In the petition she has only asked for the divorce itself and her maiden name restored. We have no kids or property to divide other than 2 vehicles. She did not include the vehicles in the petition because she knew that we would agree on dividing them. We have agreed that I will keep the older car which is paid off and she will keep the newer car that still has monthly payments owing on it. She has signed the older car over to me, however, the dealership has said that in order to remove my name from the newer car loan, she would have to refinance it in her name only. This will increase the interest rate and the car payments for her significantly. Is there a way to leave this car loan in both of our names, but sign and notarize some kind of separate agreement saying she is legally responsible for it? Would something like that hold up in court if she defaulted? If she had an accident in it and hurt someone, would I be responsible too? If I stayed on the loan, should I also stay on the car title? A friend mentioned a form called a Marital Settlement Agreement that we could have notarized, would that be a legally binding agreement?

Asked on March 9, 2011 under Family Law, California

Answers:

M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

Unless and until your name is off the loan you will be tied to her and the problems that will come up in her life forever.  I would really not suggest that you remain on the loan.  If she defaults then you default.  If they repossess the car then they can come after you for a deficiency after sale.  The loan holder is not a party to your contract of divorce and is not bound by your agreements between you.  In other words, they can come after you both and you will have to sue her based upon your agreements, written or not.  I would find some other way around this.  Since I do not know your financial status or hers I can not suggest anything.  As for liability, if you are not the owner then you will not technically be liable.  That does not mean that you will not be sued.  Attorneys do that.  They sue everyone. 


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