How to Remove a Spouse from a Car Loan

In a divorce, a lot of important and difficult decisions need to be made. One issue that can arise is how to remove a spouse from a car loan and turning over the title after divorce. It’s important to understand how this works and some of the challenges that may be encountered because a divorce decree doesn’t automatically take care of this.

During a Dallas Divorce: How to Remove a Spouse from a Car Loan

It’s important to understand that any agreements reached during the divorce don’t necessarily change a lender’s expectations. Even if a spouse agrees (or it’s in the divorce decree) to continue making payments on a car loan, it won’t matter to the lender. If both names are on the loan, both people are responsible for ensuring the debt is paid.

Keep in mind that someone’s credit can be adversely affected. So if you want to remove a spouse from your car loan, there are different options. One is to get rid of all joint loans, which means refinancing and applying for new loans solely in your name. This essentially will replace previous loan agreements.

Of course, the lender will have to approve the new loan. If your credit is poor, there can be challenges in making it happen. If your income is too low to repay the loan, it might not be approved. This sounds bad, but there is a silver lining in that if your spouse’s credit is the one that got you the loan in the first place. If yours isn’t up to par, then you won’t have a loan on your hands that you aren’t capable of paying off.

If the loan can be paid off, then doing so not only removes the spouse’s name, but also eliminates a financial burden. This can sometimes be done when you receive enough additional assets in the divorce.

Although this is the ideal way to remove a spouse from a car loan, another option is to liquidate assets. Selling the car might not be preferable — especially if you get less than what’s owed on it — but it may be the only way to get out from under that debt. Talking to an attorney will help you better understand what is in your best interest.

After a Divorce: How to Remove a Spouse from a Car Loan

It’s imperative that your spouse’s name is removed from the title. More than likely, he or she will be eager to do this because liability can become an issue if there’s an accident involving the vehicle or the driver is ticketed for traffic offenses, worst case is that you’ll be needing a good DWI Lawyer to handle cases like this which is not cheap if any car accident happened in the process.

If the loan was refinanced, it’s best to have the title changed at the same time. A certified copy of the divorce decree indicating that a car has been awarded to you should be submitted to the Dallas County Tax Office. You then will apply for a new title, which will result in a new registration. Either the license plates will be transferred, or new ones will be issued.

If the loan was paid off after the divorce, you will have to get the lien removed and be issued a new title. You will need the appropriate form filled out and evidence of the loan being paid off.

Because it can be a significant debt, knowing how to remove a spouse from a car loan is imperative after Dallas divorce. If you are just considering a Dallas divorce right now and are researching things like how to remove a spouse from a car loan, then please read more about your future options on the Texas Divorce Lawyer FAQ page.