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Don’t want to lose your car in divorce? We don’t blame you, and the good news is, you don’t have to. There are many ways to divide property during a divorce that may allow both you and your spouse to keep the assets that are most important to you. So how are vehicles divided in a Colorado divorce? Let our Colorado divorce lawyers at Halligan LLC explain more below.
Is My Car Marital Property?
This is the biggest question when it comes to equitable distribution. The judge only has jurisdiction to allocate assets that are classified as marital property, so if your car is separate property then you are not at risk of losing it and it is not subject to equitable division (assuming it has not appreciated in value during the marriage). When determining whether your vehicle is marital property, you should start with determining whether you purchased the vehicle prior to the marriage or whether it was personally gifted to you by a third party or you inherited it.
If you bought the vehicle before the marriage and there was and is no loan on the vehicle (or were personally gifted or inherited the vehicle by a third party), have maintained the title in your sole name, and have managed all maintenance for the vehicle independently, the vehicle will likely be considered your separate property and will not be subject to equitable distribution. However, if you bought the vehicle prior to the marriage, but your spouse subsequently helped with vehicle maintenance, helped you to make payments on it, you jointly titled it with your spouse, it became a family vehicle, and/or it has increased in value during the marriage, then it may be considered marital property. This determination can be complex so it is a good idea to consult with an attorney.
How Vehicles Are Allocated in a Colorado Divorce
Colorado is an equitable distribution state, which means marital property is allocated based on what is fair to both spouses. Therefore, it’s possible for one spouse to be entitled to more than a 50% share if that is what constitutes a fair division. In some cases, it may be easy to determine who gets to keep each vehicle if both are marital property and are of approximately equivalent value. In other cases, it may be more complicated to determine how the vehicles are allocated, particularly if there is still an outstanding loan in both parties’ names on one or both of the vehicles.
Common Ways to Handle the Allocation of Vehicles in a Divorce
- Sell the vehicle and split the proceeds. In some cases, such as where there is existing debt on a vehicle that cannot be refinanced or paid off, or the vehicle is difficult to accurately value, the best option may be to sell the vehicle, pay off the debt, and split any remaining proceeds. Of course, this may prove too inconvenient for some people to consider, but it should be given weight in situations where at least one vehicle carries significant shared debt.
- Offset the Vehicle’s Value with Other Asset(s). If the vehicle is marital property and you know the value, then you can pay your spouse half of the net value via other asset(s). For instance, if the vehicle has a net value of $10,000, your spouse could receive $5,000 more from a joint checking account or a share of an equivalent amount of other marital asset(s), or there could be a combination of both.
Determining the Value of Your Vehicles
The most common way to determine the value of your vehicle is to go by the current fair market value of the vehicle. This can be determined by getting an appraisal of your vehicle or checking the current Kelly Bluebook value of the vehicle. It’s also important to consider that in addition to the value of the vehicle as an asset, you must also consider any debt that exists on it. Debt must be assigned in divorce just as assets must be, however, that is not always as easy to do, as we’ll discuss below.
How is Car Debt Handled in a Divorce?
Vehicle debt can really complicate things when it comes to a divorce. If both you and your spouse are on the vehicle loan, you are both responsible for continuing to make payments. This can be a real problem if your spouse keeps the car and then defaults on the payments. You may find yourself still responsible to creditors despite having given up ownership of the car, and even perhaps having reassigned the debt. For this reason, any time you have debt in your name that will be assigned to your spouse, you should make sure to consult with a lawyer about how best to handle it before finalizing any agreements.
Schedule a Consultation with Halligan LLC in Denver, Colorado
If you are going through a divorce in Colorado and want to make sure that you have a dedicated attorney on your side to protect your rights, interests, and assets, the experienced Colorado divorce attorneys at Halligan LLC want to hear from you. Contact us today to schedule a consultation and find out about the first steps.