Consumer Car Buying Advice Blog

If the person you helped to get a bad credit car loan is now your ex it does not matter what the divorce decree states

How we know

If your former spouse had bad credit and you co-signed for a bad credit auto loan before your split, you may be wondering what your responsibilities really are. We know, because for over two decades Auto Credit Express has helped credit-challenged car buyers establish their auto credit.

During that time, we’ve personally helped hundreds of buyers at the retail level obtain a bad credit car loan while helping them avoid a tote the note dealer (buyers outside our area can now fill out a bad credit auto loan application on our web site) as well as guiding them through the second chance auto loan process (buyers who don’t understand can end up in repossession).

But helping your former spouse by cosigning a second chance auto loan can sometimes result in problems. Before you consider doing this, you need to realize you could end up paying for that loan even if you get divorced. In the worst case, your own credit scores could take a hit.

A divorce decree

We are sometimes asked that if a divorce decree makes either an ex-husband or ex-wife solely responsible for a car loan that was originally cosigned. Also, if the ex doesn’t make payments, will that affect the credit history and FICO scores of the cosigner – that is, the ex-wife or ex-husband listed in the divorce papers that is listed as not responsible for the loan.

Contracts and outside agreements

When a loan is approved, the approval is based on the information provided on the loan application. Once the loan documents are signed, it’s considered a binding contract.

Because of this fact, even if a judge rules that an ex-spouse is responsible for the bad credit car loan that you co-signed and puts that stipulation into the divorce decree, the lender can and will hold both persons that signed the contract jointly and individually responsible for the loan.

In this instance, the lender holding the finance contract considers the divorce decree to be an outside agreement that was made after the loan was granted. Since the divorce decree is not part of the original loan contract, both ex-spouses are still responsible for all loan payments.

In addition, if loan payments aren’t made on time, or if the vehicle is repossessed, this information will be reported to the credit bureaus under both spouses’s social security numbers and will damage the credit scores of both of them.

The Bottom Line

If you are involved in a divorce and have joint accounts with your soon-to-be ex-spouse, be sure to close those accounts and pay off the balances on time. Better yet, before the divorce is final, make sure all joint loans are refinanced under an individual name – making one person responsible for each loan.

Auto Credit Express has helped thousands of people with bad credit buy cars and reestablish their car credit through a nationwide network of affiliate dealers that specialize in bad auto credit.

So if you are serious about getting your credit back on track, you can begin the process right now by filling out our secure online bad credit car loan application.

Tags: Bad Credit, bad credit auto loan, bad credit car loan, divorce

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