Ex-wife and used auto loan question

OK my wife and I financed a used vehicle through fifth-third bank and we are both considered co-borrowers. We later divorced and she kept her vehicle and i kept mine. She is refusing to re-finance and take my name off the loan because her payments are gonna go up. Her vehicle is showing up on my credit report and is screwing up my debt to income ratio. What are my legal options? I've been told by some friends that I can basically force her to refinance or force her to sell the vehicle since legally it is as much mine as it is hers? Is this true?

If this is a cosigned loan, and the divorce decree clearly states it was her responsibility in the divorce, that debt should NOT be included in your DTI, if in fact you're applying for a mortgage. Similarly, if this is a cosigned debt and you can show proof she's made the payments for at least one year, again that debt should not be included. No, you can't legally force her to sell the car; she took over that debt and asset, per the divorce, nor can you force her to refinance the loan to remove you. Most nationally-based lending institutions recognize the difficulty of prior marital debts and have devised the above 2 methods as a way of accomodating a prior divorce.

If in fact you're applying at a mortgage company and the company refuses to acknowledge this possibility, I'd strongly suggest you run as far as you can and find a qualified company accustomed to this standard procedure. Most of the major car finance companies also practice this policy, but that can be an individual company policy. The next time it happens, bring this up to whoever you're speaking with: ask that if you have proof the car loan was included in the divorce as your 'ex's responsibility, will they still consider this your monthly obligation? Again, if any lender refuses to acknowledge this standard industry practice, find one experienced enough to not bat an eye the minute you mention "prior divorce."

Simply put, any reputable banking institution should NOT be including that debt if in fact, your divorce decree specifically awarded that debt to your ex, or even if you can document the car mentioned in the decree (if that's in fact the case) was secured by the loan in question. Most financial institutions will accept that final recorded decree a legal document absolving you of the responsibility. On the other hand, if no such arrangement was specified and if you can get proof you did NOT make the payments for at least 1 yr, again any reputable financial institution should not include it in your DTI. (I say 'should.' While that's the norm with national companies and practiced by the federal government, it may not be practiced by smaller, more financially vulnerable lending institutions.) You'd need to ask to find out.

Hope this helps. Good luck. One quick question, if I may: what type of loan are you asking about?

Well i haven't applied for any loan just yet, but i just saw it on a copy of my credit report and i assumed that it would mess up my dti. Another concern of mine is if she defaults on the loan or defaults on her insurance or even does something to total the car without being covered by insurance. I've heard horror stories about ex-husbands 5 years after the divorce being held liable for the cost of the vehicle and am trying to avoid this! Thats why i'm pushing for the re-finance.

I think you're wise to push for the refinance in terms of your credit history. The horror stories you've heard are very real, but don't let it stop you from applying for either a car, home or other large secured debt, again with a reputable bank/finance company. You may want to contact the particular creditor directly to find out what their policy is, should one of the parties default on the payments, but be prepared for the standard response. You're jointly obligated for that note. You already know that. The good news (and there is some here) is that there are certain measures as put down by law (called the Fair Debt Collection Practicies Act) that you may want to study up on. It specifically addresses how anyone can pursue you to collect on the loan, should it default. And any reputable lending institution will very definitely take your circumstances into consideration when you apply for new credit. I can assure you of both.

Again, out of curiosity, does your settlement agreement specify this particular debt?

*Adding a link from my place of employment: http://www.ftc.gov/os/statutes/fdcpa/fdcpact.shtm

Here is exactly what the divorce papers say.........


The parties acknowledge that they previously have made a division and settlement of their personal property now in his or her possession. The parties agree that their automobiles shall be disposed of as follows: The 1997 Jeep Wrangler (mine) shall be the sole property of the Husband and the 2000 Jeep Wrangler (hers) shall be the sole property of the wife. All expences in connection therewith shall be assumed solely by each of the parties. Each party shall own,have and enjoy, free of any right or claim of the other party, all property hereafter acquired by such party.


Does this mean she has to refinance because of the free of any right or claim of the other party part???


What does all this mean in english?

In English, it means she is solely responsible for the expenses on that car, in the eyes of the court and in the eyes of a reputable lending institution. It also means that each of you are free of the other's input when it comes to the decisions either of you make in regards to your prospective cars (and other so-divided martial possessions.) You can no more "force" her to refinance than she can "force" you to refinance yours. "All expenses" would not only cover repairs, mechanical maintenance and the like ... and, it can be argued in certain instances, the existing loan used to purchase that car. It should be relatively easy to prove. The last sentence simply states she has no legal right to any property you acquired after the date of the agreement. The same holds true for you, by the way.

There were horror stories in the past. That shouldn't be the case any longer. There are federal regulations in place that allow any licensed lender to omit an instances such as yours while rendering a credit decision. The original bank, however, may attempt to both harass you (should the loan ever default) or enter adverse information on your credit report. Legally, they can. Ethically, I believe that's another story. It's because so many banks, etc. did exactly that that these regulations came into place to begin with. That regulation doesn't supercede your original binding contract ... it simply allows you to get on with your life.

I've gone back to my original post and added a web link for you. These are only a few of the statutes I'm required to observe every working moment. If it gets a bit too confusing (and trust me, you aren't alone in that one,) you can simply type "Fair Debt Collection Practices Act" into any web search engine to come up with countless, less complicated definitions.