Many people choose to meet their transportation needs by leasing a car or truck. These agreements typically last for two or three years. Of course, a lot can change during that timeframe, including one’s marital status. When a divorcing couple has a leased vehicle, there could be substantial disagreement about remaining payments and who gets to stay behind the wheel.
A threshold issue is whether one or both spouses signed the lease agreement. In cases where one individual is responsible for payments, the vehicle and remaining financial obligation usually remains with them. Unlike a car that might be owned by a husband or wife, a leased vehicle is not a marital asset, so it is not subject to marital property division.
Situations where both spouses signed the car lease can be more complex. The divorce judgment may say that one spouse gets the vehicle and must make the payments, but that order only governs the spouses; it does not bind the leasing company or lender. Husbands and wives might break their legal bond, but their joint car lease endures.
if your ex-spouse is awarded the car in the divorce and fails to make payments, you could still be held accountable by the leasing company or lender. Your credit could take a hit, and could even face collection actions related to a vehicle that you no longer drive. A lease is essentially a long-term rental agreement, and it typically comes with strict conditions for early termination or transfer. As part of your divorce, it might be necessary to discuss one or more of the following options with your leasing company:
- Transferring the lease — Depending on the circumstances, you might be permitted to transfer a joint lease to one spouse if that individual meets the leasing company’s credit requirements.
- Lease termination — When neither party wants to keep the vehicle, you can review the language pertaining to lease termination. However, there might extra costs for ending the agreement early, wear and tear or exceeding mileage limits.
- Vehicle purchase — Should you want to keep your car or truck, the lease could offer a way to purchase it.
As you deal with the emotions of a divorce, it’s critically important to manage the financial aspects associated with the end of your marriage. Bryan L. Salamone & Associates, P.C. helps Long Island residents secure favorable terms relating to the division of assets and debts, including situations involving family vehicles. Call us today at 631-388-6009 or contact us online for a consultation.