Separating resources and financial obligations can be a major challenge for divorcing couples. Economic negotiations can require months to resolve. In some cases, they may need to go to mediation to resolve their disagreements. They may even require litigation to resolve all of their disputes.
Certain types of assets can make property division negotiations much more difficult for people to navigate. Valuable, necessary assets that also create a financial obligation can be a point of contention during economic negotiations.
Many people with vehicles still owe money on the loans used to finance their purchase. What happens to a financed vehicle during a New Jersey divorce?
Creative solutions may be necessary
A financed vehicle is not just an asset worth a set amount of money. It also represents a shared debt. Even when only one spouse has their name on the loan paperwork, if the debt originated during the marriage, both spouses may share a responsibility for it. Under equitable distribution rules, spouses must address the equity and the debt they owe on the vehicle.
Spouses can agree to have one person refinance the vehicle loan and assume ownership of the vehicle as part of the divorce. In some cases, such as when a parent relies on that vehicle for caregiving responsibilities, the spouse who does not retain the vehicle may sometimes continue to assist with payments or share responsibility for the loan.
Spouses can create whatever arrangements they believe are fair. If spouses cannot agree on terms, then they may need to litigate in family court.
Having realistic goals for priority assets is important for people preparing for property division negotiations. Spouses who set clear priorities are less likely to make emotionally-focused mistakes during property division that can affect them for years to come.