Loan during divorce: how is consumer, mortgage, car loan divided?

In recent years, there has been an increase in mortgage lending. For many families, this is practically the only option for purchasing their own residential property. However, the presence of a large number of divorce cases leads to the need to divide the mortgage during a divorce. Moreover, the spouses will have to divide both the real estate itself and the remaining obligations to the bank.

How is an apartment taken during marriage divided in a mortgage during a divorce?

This is the most common situation in which a husband and wife have equal rights to real estate. At the same time, they also bear joint and several liability for the mortgage taken out. That is, mortgaged real estate, when purchased during marriage, is in any case considered jointly acquired property. Consequently, each spouse has the right to claim half of the property and must assume 50% of the loan obligation.

In practice, managing and dividing housing is far from easy, because it is pledged to the bank. Therefore, all actions with the mortgaged object must be coordinated with the credit institution

Division of a mortgage during a divorce in the absence of a dispute, as well as complicating circumstances (presence of children, only home, etc.) is possible in the following ways:

1. The ownership of an apartment or house is registered in the name of one of the spouses, the loan agreement does not change. And among themselves they sign an agreement on the division of real estate and debt in a 50/50 ratio. Then the ex-husband and wife continue to pay the loan in half. When the loan is paid off, they either sell the property and divide the money or register the right to ½ share for each.
2. One of the former spouses refuses his share. When he has other housing, this option is quite acceptable. He carries out the refusal free of charge or for monetary compensation. The bank re-registers the mortgage and housing completely in the name of the other spouse and removes the co-borrower from the mortgage agreement. However, the credit institution will do this only if the remaining borrower is sufficiently solvent.
3. By agreement of the husband and wife, the entire debt is paid to the bank, that is, the loan is repaid ahead of schedule. Next, the apartment or house is sold, and the funds are divided equally (but possibly in a different order). This division option is optimal when the spouses have money to close the mortgage or the debt balance is small.
4. The apartment or house is sold, and the money from the sale goes to close the debt obligation and the remaining is divided between the spouses. Of course, such an operation is possible only with the approval of the bank. He may not cooperate and oblige the spouses to repay the loan.

A more complex situation arises when there is a dispute when one of the spouses claims a larger share than ½. He can justify this:

• Investing personal funds into a down payment on a mortgage.
• Early payments from the money he had before marriage.
• Contribution of a significant amount by relatives of the spouse and in a number of other cases.

Then the mortgage during divorce is divided as follows:

1. By a settlement agreement or through the court, a higher share of one of the spouses is established and the entire mortgage is re-registered to him, the remaining debt also goes to him. But he pays the second spouse half of the money contributed for the period of cohabitation.
2. With the consent of the bank, the loan is divided into two new loans, each spouse receives their own loan agreement. Real estate also goes to everyone in the amount determined by the court. Not every bank will do this, because its risks increase and if there is a delay, then instead of one loan there will be two.

What to do with a mortgage during a divorce if it was taken out before marriage?

When dividing a mortgage in such a situation, it is important for ex-spouses to understand two main points:

1. Property acquired before marriage is the property of the person who acquired it. Accordingly, the obligations that remain after the divorce (mortgage loan) also remain with the owner of the property.
2. Since the cost of mortgage housing is paid gradually over many years, it is logical that part of the money could be paid from the general family budget during the marriage. Consequently, the second spouse can reasonably demand from the first half of the funds contributed to repay the loan (unless the first spouse proves that absolutely all payments are his personal funds).

The courts take both of these points into account, although they are somewhat contradictory. The cornerstone in dividing such a mortgage is precisely in determining which part of the payments was made from general money, and which part only from personal money. That is, mortgaged real estate, to some extent, can be recognized as jointly acquired property.

A mortgage in the event of a divorce of spouses in the event that one of them purchased housing before marriage is divided in the following ways:

1. The property remains with the spouse who acquired it. By a court decision or a settlement agreement, the amount of money that is due to the second spouse is determined. Accordingly, this money is paid to him by the owner of the property under the mortgage.
2. The property is divided into shares in proportion to payments made from common family funds and the personal investments of each spouse. However, this option is only possible with the consent of the bank and if the apartment is not a one-room apartment, since physically unallocated shares cannot be pledged.
3. There are possible division options similar to those that occur when dividing a mortgage taken out during marriage. But you need to prove that all payments (or most of them) were made jointly. Then the court recognizes the property as common property with all the ensuing consequences. This situation most often arises when a mortgage is taken out by one of the spouses shortly before the marriage is registered.

If there are children

The presence of minor children, including those registered in mortgaged housing, does not affect the division of the remaining debt. But when dividing up the real estate itself, the court always takes this fact into account.

The main nuances of how a mortgage is divided in the event of a divorce between spouses and children:

1. The spouse with whom the child will live may be allocated a larger share, but at the same time he will have a larger mortgage debt.
2. If a child has an ownership interest in real estate, it is added to the share of the parent with whom he remains.
3. When a child is registered in an apartment or house, but only the husband is the owner, then his wife has the right to receive a share in this property if she leaves the minor with her and she has no other housing.
4. When selling a mortgaged home and there is a registered child in it, he must be registered.
5. If the child remains with the mother and it is difficult for her to pay the mortgage (being on maternity leave, disability), then the amount of the monthly payment for her may be reduced, and the remainder will be temporarily assigned to the child’s father by court decision.

It is worth mentioning that the presence of children and their registration does not affect the procedure for collecting mortgage collateral when there is an overdue loan debt.

If maternity capital was contributed to the mortgage

For families who own maternity capital, the issue of dividing the mortgage is more than relevant. After all, money from the state is involved in buying a home.

The nuances of the division will be as follows:

1. The child’s share, which was allocated from maternal capital, is added to the living space of the spouse with whom he remains. In this case, the mortgage obligation is most often divided equally if there are no other significant factors.
2. After a divorce, the ex-wife can pay off all of her debt (or part of it) to the bank through maternity capital. However, she will not be able to dispose of the property until the loan is fully repaid.
3. When at the time of the divorce the child’s share has not yet been allocated, the court imposes an obligation on the parents to do this after paying off the entire mortgage.
4. It is simply impossible to sell an apartment or house in shares and divide the money if maternity capital is involved: the transaction will be declared invalid, since children cannot be left without housing. If you “crank out” such an operation, then the spouses will be obliged to return the cash equivalent of maternity capital to the budget (for 2020, 466,617 rubles).

If there is a marriage contract

Concluding a prenuptial agreement greatly facilitates the resolution of the issue of how the mortgage is divided during a divorce. It spells out important points regarding the division of real estate if the spouses divorce. That is, there will be no lengthy divorce proceedings, but the contents of the marriage contract will immediately be taken into account.

In particular, the following important information may be included in this document:

1. One of the spouses does not claim housing, and is also not responsible for paying off the debt. Or it can be stated that he can only claim monetary compensation in joint payments during the marriage. This option is used more often when the mortgage was taken out before marriage, and the homeowner has already paid a significant amount on his own. And in cases where, for a number of reasons (bad credit history, debt, etc.), one of the spouses cannot be a co-borrower.
2. Exact shares in real estate, the possibility of paying monetary compensation in case of refusal of a share, how the loan obligation will be distributed during a divorce.
3. The mortgage will be repaid jointly (for example, when taken out by one of the spouses shortly before marriage), the procedure for dividing the housing will also be prescribed, and separately if children are born.

It is imperative to notify the bank of the existence of a marriage contract.

Is military mortgage divided?

A particularly pressing question for military personnel and their spouses is how to divide a military mortgage during a divorce. After all, housing within the framework of such a program is provided by the Ministry of Defense (MoD) of the Russian Federation. It also pays the mortgage.

Therefore, the division of such real estate has the following nuances:

• Since only the military man is a participant in the program and it is he who appears in the mortgage agreement, in the event of a divorce he remains the owner in the vast majority of cases. That is, an apartment or house is not recognized as jointly acquired property.
• The military mortgage loan agreement cannot be reissued.
• The former spouse can claim a share or part of the invested funds in this property only if he proves that:
  • in addition to state funds, money from the family budget or personal funds were invested to purchase housing;
  • during the payment of the mortgage loan, the serviceman retired from the Armed Forces and payments began to be made from the joint funds of the spouses;
• If the ex-spouse (usually the wife) plans to claim a share, then division of housing under a military mortgage can be achieved only after the loan has been completely closed. Any other transactions (sale, exchange, donation) are also impossible with this housing. This is explained by the fact that the real estate is pledged to both the bank and the RF Ministry of Defense.
• If there are children and the ex-wife does not have any other housing, and when she does not have the right to the mortgage housing of her ex-husband, the maximum she can achieve is that the court will allow her and the child to live in this property.

Step-by-step diagram for dividing a mortgaged apartment and a mortgage in case of divorce

When dividing a mortgage loan and an apartment, the main stages of the spouses’ actions will be as follows:

1. A settlement agreement is drawn up that suits both spouses. You can consult in advance with the credit institution that issued the loan which option suits the bank better. If it is not possible to reach an agreement, then a statement of claim should be prepared in court.
2. After the divorce is officially registered, the bank must be informed about this fact and offer for approval its version of a settlement agreement on the mortgage property and the remaining debt. If the bank refuses, you should try to find a compromise that suits all parties.
3. If all three parties are satisfied with the further fate of the mortgaged property and the distribution of debt obligations, then they should contact a notary to approve this agreement.
4. Next, both spouses fulfill their obligations under the settlement agreement (repay the entire debt, receive their loan agreement, put the property up for sale, etc.).

Read also: What documents are needed for a child’s personal insurance: how to get it and why

Spouses should remember that if they refuse to pay, the bank after some time (when the debt has accumulated for 3-6 months) may begin selling the property.

The proceeds will be used to first cover the debt, penalties and fines. The remainder will be divided between the former borrowers (spouses). This is the most unprofitable and unpleasant way to divide a mortgage.

Therefore, it is still recommended to come to a common decision through negotiations and not delay the division of the mortgage.

Source: https://IpotekuNado.ru/voprosy/ipoteka-pri-razvode-suprugov

Division of a credit car after a divorce, how a car is divided on a loan

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If the family relationship lasted at least a few years, the marriage partners probably had some common property rights. At a minimum, this is a shared car.

Upon divorce, this property must be divided in accordance with the interests of both parties.

But what if the car loan is still not paid off for the family’s only car that is subject to division? The procedure and possible options for determining the fate of the car can be found in the presented material.

General rules for division of property

According to the norms of family law, both marriage partners have complete equality in the exercise of their rights and responsibilities. This means that they not only have equal rights to common property, but must also bear equal property and monetary obligations.

The legal regime of family property has the following features:

• everything acquired at the expense of the spouses’ common funds is recognized as their joint or shared property;
• everything that belonged to the newlyweds at the time of registration of the marriage in the registry office, and also received by them free of charge during the marriage, is not included in the common property of the spouses.

Premarital property of citizens, as well as objects acquired through gratuitous transactions, will not be subject to division even after the termination of the marriage relationship. Gratuitous transactions include donation and inheritance.

If the car belonged to the man or woman before marriage, was purchased before marriage on credit, or was given as a gift or inherited, no disputes about its division can arise.

An exception is the situation if the spouse contributed a large sum of money to repair the vehicle. A similar situation is the repair of a car by a spouse. In such a situation, he may demand a share of the car.

As a rule, the court does not decide on the division of the vehicle. But it can force the owner to pay the amount by which the cost of the car has increased.

If the car was purchased at the expense of citizens’ own funds, the following standard options for dividing it are available:

1. Transfer of a vehicle to one of the spouses with simultaneous payment of compensation to the other partner.
2. Selling a car for a market price and dividing the proceeds equally or in shares determined by the court or spouses.
3. Leaving the car in the ownership of one of the spouses with the transfer of part of any other property to the second spouse.

The situation is completely different with a car purchased during marriage using car loan funds.

Division of a car on loan

The issue of dividing a car under a loan will be resolved based on the equality of not only the rights, but also the responsibilities of the former spouses. For a car loan taken out during marriage, responsibilities are equally borne by both partners, regardless of who has the title to the vehicle.

Citizens have the following options for dividing property, including a shared car:

• by mutual agreement with notarization of the agreement;
• by contacting the judicial authorities.

If options for distributing property by mutual consent of the parties are used (agreement or marriage contract), the parties may deviate from the principle of equality of rights and obligations, including in terms of loan repayment.

Section restrictions

Splitting a car loan in all the ways listed above is not so easy.

A car loan has a specific purpose for borrowed funds, therefore, when it is issued in favor of the bank, a pledge of the purchased car is established. This means that the car cannot be sold without the bank’s consent, and the original documents for the car will be kept by the bank until the loan obligations are fully repaid.

Since a car under a loan obligation is not initially subject to division in kind or sale without the consent of the bank, it will in any case be transferred to one of the former spouses.

If, instead of the law, the regime of joint property of the spouses is regulated by the terms of the marriage contract, then it can clearly state which of the citizens will receive certain items or objects acquired during the marriage. In this case, determining the amount of compensation may not be necessary.

If a dispute arises when establishing the amount of compensation, it is necessary to determine the market value of the machine, since as a result of its operation the marketable value is lost. The market price is determined by preparing a report from an independent appraiser. This document will be used not only for voluntary division, but also in legal proceedings.

Important! If you disagree with the result of the assessment, one of the spouses may order a re-examination at his own expense. In this case, the court will be obliged to establish the reliability of each reporting document, giving preference to the most motivated one.

Section options

Based on the market value of the car, its division will be carried out taking into account the following features:

1. If there is mutual agreement to transfer the vehicle to one of the spouses, the second spouse is subject to payment of compensation in the amount of half the market value of the car minus a proportional share of the remaining loan obligation. Instead of compensation, the spouse may also be provided with other property commensurate with the amount of compensation due.
2. In court, shared ownership of a car can be established, in which each spouse will have to pay part of the loan obligation until it is fully repaid (after which the car can be sold and the proceeds divided equally).

Transferring a car to a spouse in each of the division options implies the automatic occurrence of an obligation to pay compensation and repay the loan. The above option applies mainly to cases where borrowers took out a targeted car loan with the establishment of collateral.

Who will get the credit car?

Is it possible to determine in advance which of the former spouses will receive the car based on the results of the division? If this is not stated in the agreement or marriage contract, then no.

The court, based on the demands of the plaintiff and the position of the defendant, independently makes a decision taking into account all possible circumstances of the case.

Let's consider various life situations that arise among citizens.

Section by law

Family law provides for absolute equality of rights between men and women in the distribution of joint property assets.

If a car is subject to division, for which the car loan has not yet been repaid, the following options for derogating from equality of rights are possible:

• if one of the partners during the marriage, without good reason, avoided receiving income into the family budget, and did not manage the household and did not participate in family life;
• if one of the spouses spent common funds contrary to the interests of the family (abused alcohol, drugs, participated in gambling, etc.).

In this case, the transfer of a vehicle to a man or woman may not be accompanied by payment of compensation at all, or its amount may be significantly reduced.

All these arguments must be reflected in the statement of claim or clarified at the court hearing. When filing a claim for division of a credit car, it is recommended to follow the general rules for filing a claim for division of property. For more information on filing a claim for division of joint property of spouses, see a separate publication.

Based on need

Despite the principle of equality in the division of joint property, the court will have to decide which of the parties should transfer the car in kind and who should be awarded compensation.

In this case, the court’s decision will be influenced by additional circumstances:

• which spouse used the car more often;
• which of them does not have a driver's license;
• who used the car as a means of work;
• with whom does the child stay and is there a need to transport this child.

Taking these factors into account is not mandatory for the court, but in practice this is the procedure for dividing and determining the new owner of the car.

Example . The classic situation is that the car is used by the husband, but the wife does not have a driver’s license at all. In this case, the court will leave the vehicle with the ex-husband, obliging him to pay half the cost of the car to the ex-wife.

If the car was purchased using a conventional loan

It will be much easier to solve the problem of dividing a vehicle purchased under the terms of standard consumer lending. In this case, the loan does not have a targeted nature, and no collateral is placed on the car.

• If the court determines common shared ownership after division, the loan obligation will be transferred to the owner of the car in the specified shared proportion.
• In all other cases, the loan is subject to independent division as a joint obligation.
• When dividing property, a car purchased using funds from a non-targeted loan will:

• transferred to one of the parties with the simultaneous imposition of an obligation to pay compensation;
• sold at the market price with subsequent division of the received funds equally.

The loan obligation, based on established practice, will be transferred to the actual owner of the car for further repayment. The second spouse has the right to expect to receive partial compensation to repay the funds paid on the loan, but only if he participated in the payment of the loan.

If the second spouse proves that he did not know about the loan taken by his marriage partner and did not consent to it, this obligation cannot be considered general, which is established by the court.

The division of a car issued on credit during a divorce has its own characteristics. As practice shows, the vehicle and the loan will be separated independently. In any case, it is better to consult a family dispute lawyer in advance, since only a specialist will be able to identify all the problematic issues in your dispute.

• Due to constant changes in legislation, regulations and judicial practice, sometimes we do not have time to update the information on the site
• In 90% of cases, your legal problem is individual, so independent protection of rights and basic options for resolving the situation may often not be suitable and will only lead to a more complicated process!

Therefore, contact our lawyer for a FREE consultation right now and get rid of problems in the future!

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Source: http://allo-urist.com/kak-razdelit-mashinu-pri-razvode-esli-ona-v-kredite/

Recommendations for dividing a mortgage in a divorce

Having an outstanding mortgage and dividing the property encumbered by the mortgage adds a lot of complications to a divorce.

In this situation, divorcing spouses immediately have many questions. How to divide an apartment that is pledged to a credit institution? Who and in what part should pay off the mortgage loan in the future? How to resolve the issue with co-borrowers?

Moreover, each situation has many specific nuances, so there is no unambiguous solution and algorithm for dividing responsibilities for a mortgage and collateral real estate. Moreover, law enforcement judicial practice has not yet developed precedents that would serve as guidelines when courts make decisions in similar situations.

It is not surprising that completely different court decisions are made in similar cases, even opposite ones.

The situation with a mortgage is complicated by the fact that in these legal relations the interests of three parties are affected at once (divorcing spouses and the bank), in contrast to the division of property not encumbered by a mortgage, where it is enough for only the former spouses to come to an agreement. Therefore, finding a solution that satisfies all stakeholders at once can be much more difficult.

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In many cases, when dividing mortgage housing and loan repayment obligations, the interests of one of the parties are significantly impaired.

For example, there are precedents when a borrower, deprived of an apartment during a divorce, is forced to repay the loan for a long time.

Or a bank that wants to sell a mortgaged apartment for which the loan is not being repaid is faced with a situation where the mortgaged apartment, by court decision, is no longer considered the sole property of the borrower.

Legal regulation

• These difficulties in dividing mortgaged housing in the event of a divorce are associated, first of all, with insufficient legal regulation of this issue in Russian family and civil legislation.
• When considering divorce cases where the issue of mortgage is raised, the courts are guided by the Family Code, the Civil Code and the Federal Law “On Mortgage”, as well as the mortgage agreement drawn up between the bank and the borrower.
• The basic principle of the division of mortgage property during a divorce, set out in the above-mentioned legal acts, is that:

• residential premises acquired by spouses during marriage using mortgage funds are jointly acquired property, which entails corresponding legal consequences;
• the joint property of the former spouses should be divided in half, unless a different order is specified in the marriage agreement;
• when dividing property acquired by spouses with borrowed funds, including a mortgaged apartment, it does not matter at all to whom the mortgage loan was issued.

Financial obligations to the bank are also assigned equally to divorced spouses, regardless of whether they were co-borrowers or the mortgage was issued to one of them.

Thus, based on the requirements of Russian family law, the “fifty-fifty” principle applies when dividing any joint property of spouses. However, in practice, dividing a mortgaged apartment in half is quite problematic, since the housing is pledged to a credit institution, and the owners cannot take any legal actions with it.

How to avoid problems during division

Most conflicts and controversial situations related to a mortgaged apartment can be avoided by first concluding a prenuptial agreement.

Russian legislation allows you to draw up a marriage agreement both before registering a family and during family life.

However, statistics show that, despite all the advantages of marriage contracts, no more than 5% of Russians draw up such contracts.

Another important legal safeguard that is used to protect the interests of all parties to a mortgage is the mortgage agreement.

Currently, credit institutions, which have repeatedly encountered problems with mortgage payments by former spouses, have acquired quite a solid experience in legal mortgage disputes.

As a result, mortgage agreements drawn up by banks minimize the lender’s risks in the event of a divorce between borrower spouses.

The vast majority of banks try to make both spouses co-borrowers on the loan, which, in principle, is beneficial for the married couple themselves, since they can combine income and receive a larger loan amount.

In addition, many banks began to include an important condition in their mortgage agreement: “If the family relationship between the co-borrowing spouses is dissolved, the terms of the mortgage agreement do not change.”

Such a clause in the contract is additional insurance for the bank.

If the spouses who agreed to this condition of the mortgage agreement divorce and one of them refuses to pay the mortgage, then financial responsibility for the payments will completely pass to the other.

Such a legal guarantee, unfortunately, protects exclusively the interests of the bank, and divorcing spouses will still have to defend and defend their interests.

Practical recommendations

In fact, divorcing spouses have only three options:

• continue to pay the loan;
• find the missing cash and pay off the mortgage early. After this, you can sell the apartment at a favorable price and divide the proceeds in half or by agreement of the parties;
• sell a mortgaged apartment with the consent of the bank.

To divide a mortgaged apartment, you can contact the credit institution that issued the mortgage directly with a request to approve the sale of a common matrimonial apartment.

It is difficult to predict the reaction of a particular bank to such a proposal. In this situation, a credit institution can:

• agree to the sale of a mortgaged apartment;
• demand early repayment of the mortgage by the spouses, justifying this by the fact that the upcoming (or already registered) divorce violates the agreed terms of the loan agreement;
• oblige the spouses to pay the mortgage without selling the apartment.

In many cases, the bank agrees to sell the mortgaged apartment, since this reduces the risk of non-payment of debt by divorced spouses. If the bank's consent is received, the spouses need to find a buyer for their mortgaged home who agrees to purchase an encumbered apartment.

In this situation, the buyer, in order to take ownership, must first compensate the bank for the amount of debt on the mortgage loan and wait until the entire process of removing the encumbrance from the purchased apartment is completed.

Of course, not all buyers will agree to such a difficult option, since the risks increase and the time drags on. Therefore, divorcing spouses who want to sell a mortgaged apartment often have to reduce the price of their home in order to interest a potential buyer.

Regardless of the development of the situation with the sale of the apartment, the divorcing spouse must continue to make payments on the mortgage loan. Otherwise, the situation can only get worse. A bank that does not receive loan payments has the right to sell the mortgaged apartment at auction, and the price of the sold housing, as a rule, is much lower than the market price.

From the proceeds from the sale, the credit institution will retain the principal debt, fines, penalties, unpaid interest and expenses for organizing auctions, and only the remaining amount will be divided between the former spouses. As a result, you can be left without housing and without financial compensation.

Another important rule when divorcing persons who borrow mortgage funds is that they must notify the credit institution of the divorce . Under the terms of any mortgage agreement, borrowers are required to immediately notify the bank of significant changes in their lives, including divorce.

If the parties to the mortgage agreement cannot reach an agreement, they must go to court. As already mentioned, there is no clear development of the situation during the trial.

The court may force the credit institution to carry out transactions with the mortgaged apartment, oblige the mortgage agreement to be reissued for one of the divorced spouses, and oblige the spouses to continue making payments until the loan is repaid. Other solutions are also possible.

If spouses decide to repay the loan in order to then sell the apartment, it is possible to divide the mortgaged property into shares during the divorce. To do this, they need to contact the creditor bank with an application.

However, problems and pitfalls are also possible here. For example, the bank will refuse this option.

He may not be satisfied with the income of one of the spouses, who, when registering shared ownership, must act as an independent borrower.

Or the mortgage collateral is a one-room apartment, the division of which into shares in kind is not possible. Such property, according to the Federal Law “On Mortgage,” should not act as an independent subject of mortgage.

The bank's refusal can also be appealed in court.

Another option for division during a divorce is that one of the divorcing spouses, free of charge or for monetary compensation, signs a waiver of his share in the common housing encumbered with a mortgage, and the other agrees to take on all payments on the mortgage loan.

If the bank is satisfied with the solvency of the second spouse, then the transfer of ownership of the mortgaged housing is registered with the territorial registration authority. As a rule, the bank charges a commission for re-issuing a loan agreement (0.5% - 1% of the remaining debt).

Source: https://razvodimsja.com/razdel-imushhestva/ipoteka/pri-razvode.html

How is a car divided during a divorce if it is on credit?

Home » Division of property » How to divide a car during a divorce if it is on credit

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During the divorce process, many families are faced with the division of property, in particular a car, including one taken on credit. Therefore, the question of who will get the vehicle (VV) and how to repay the balance of the car loan quite often arises before participants in divorce proceedings.

Article 34 of the Family Code of the Russian Federation establishes that all property of spouses acquired during marriage is their joint property and is divided equally upon divorce. But the car cannot be divided; it can only be given to one of the divorcing spouses, regardless of whether one of the spouses took out a car loan or both.

Therefore, in any case, they will have to decide the question: who will get the vehicle after the divorce. You can reach an agreement and resolve everything peacefully; if you fail to reach an agreement, you will have to resort to legal proceedings.

If you go to court, there are several options for resolving the issue:

• the court transfers the car to one of the spouses, obliging him to pay compensation to the second;
• a verdict is made on the obligation of both spouses to continue paying the car loan until the debt is fully repaid, followed by the sale of the vehicle and division of the proceeds.

In the first case, the entire debt on the loan is assigned to the spouse who received the car; as a rule, in such cases, the car is transferred to the person for whom the car loan was issued. The second spouse is awarded compensation in the amount of 50% of the amount already repaid.

For example, a couple took out a car loan for a vehicle worth 950 thousand rubles, paid it off jointly, and at the time of the divorce the amount of 550 thousand rubles remained outstanding. A sum of (950 – 550 = 400 thousand rubles) was paid jointly. We divide this amount in half, it turns out that one of the spouses owes the other (400 / 2 = 200 thousand rubles).

What is the difference between jointly acquired property and a personal loan?

It must be borne in mind that not all property after a divorce is subject to division; some of it may be the personal property of one of the spouses and, of course, remains with the owner. Therefore, during the divorce process, it is necessary to determine what exactly and whose property is:

1. Joint property. Such property is considered to be any acquisition made during the marriage, regardless of who exactly paid for the purchase, to whom it was issued, who uses it, or to whom the loan was issued.
2. Personal. This is not only property acquired before marriage, but also received by inheritance, as a gift, or purchased with money also received as a gift or inheritance by one of the spouses.

Methods for dividing a car

Property can be divided within three years after divorce, and there are two methods for dividing a vehicle:

1. Voluntary agreement. The spouses find a compromise solution that suits both parties and draw up a joint document that clearly defines all the nuances of dividing the loan car. It must be certified by a notary so that subsequently one of the parties to the agreement will not be tempted to violate the agreement. As a rule, spouses decide to either sell the vehicle and divide the proceeds, or give it to one of the spouses with payment of compensation to the other, or, as an option, transfer it to their joint children for ownership.
2. With the help of the court. A loan car is most often divided in this way, because it is difficult for ex-spouses to come to a common opinion - who will keep the car, who will pay the balance of the debt to the bank, what compensation is due to whom. The spouse who decided to go to court collects the necessary documents and writes a statement of claim. Next, the court, taking into account the requirements of each spouse and other important nuances, decides the fate of the vehicle.

A voluntary agreement is the most civilized and painless way of dividing jointly acquired property, but, unfortunately, most often the former spouses cannot agree, and then they have to resort to litigation. This is a complex process in which there are many different nuances, let’s look at some of them.

The procedure for dividing a credit car in court

If the spouses have not reached a consensus on the future fate of the car loan and a trial is ahead, then it is better to prepare for it in advance so that your opponent does not shift all the costs of the car loan to you. To do this you need:

• contact the traffic police with a request to prohibit the re-registration of the vehicle;
• if possible, obtain a certificate from the bank about the balance of the debt; it is worth noting that if you did not take out the car loan, then this action is difficult;
• prepare a photocopy of the loan agreement, making sure to have the document certified by a notary.

Read also: Replacing tax identification number when changing surname: through government services, after marriage, sample application

Only after this you need to write a statement of claim and take other steps to prepare for the trial.

A necessary condition for dividing a vehicle in a court hearing is an accurate determination of its market value.

Therefore, if the car was purchased quite a long time ago, it will be necessary to determine its value using a commodity examination; for this, the plaintiff must turn to independent experts.

If an examination is not carried out at the time of filing the claim, the court itself will appoint one, and the division process may drag on indefinitely.

After determining the market value of the vehicle and considering all the arguments of the parties to the trial, the court will issue a verdict with one of several division options:

• sell the vehicle and divide the proceeds equally between the former spouses;
• transfer the car to one of the spouses, obliging him to transfer half the cost of the vehicle to the other according to an independent assessment;
• transfer the car to one of the parties and oblige him to purchase the other party as compensation a new vehicle at a price not lower than half the cost of the disputed car.

Thus, any of the former spouses can be sure that each of the parties will receive a part of the disputed car, whether through a court decision or a settlement agreement.

In what situations does the court divide property unequally?

In some cases, the court does not divide the disputed property in half, but gives preference to one of the parties. In what situations does this happen:

• as a rule, if minor children remain with one of the spouses, the court does not divide the property equally, transferring most of it to the party with whom the child remained;
• if one of the spouses sold, destroyed or hid part of the property that belonged to the spouses before the divorce, then the remaining property is divided taking into account what was lost or hidden;
• if one of the spouses did not take any part in the financial support of the family, and at the same time abused alcoholic beverages or lost joint money, or behaved in some other way unworthy, then the court awards him a smaller part of the joint property, in some cases, leaving all the property to the other side.

What nuances does the court take into account in the process of dividing a credit car?

During the trial, all the nuances of the case are considered, the court especially carefully takes into account the following points:

1. When was the car loan taken out: before or after marriage?
2. For what period was the loan agreement drawn up, what amount remained outstanding, how long will payments continue.
3. Did the second spouse approve the car loan, is he a co-borrower?
4. From what funds were payments made?

For example, a loan agreement was issued in the name of a spouse, the vehicle is also registered in her name, but the car was used by her husband, she does not even have a driver’s license. In this case, the court will most likely transfer the car to the spouse, obliging him to compensate his wife for half the cost of the car.

If the court does not prove any special circumstances in favor of one of the spouses, then the property will be divided equally. If it turns out that, for example, one of the spouses took out a car loan before marriage, but subsequently they both paid off the debt, then the court will most likely decide to divide the car in proportion to the contribution of each to its purchase.

How is a credit car divided in court if both spouses need it?

Often in a lawsuit, each spouse makes a claim that he needs the car more than his opponent. Everyone begins to prove that without a car his standard of living will drop noticeably, that he needs it for work, but does not have the means to buy a new one. That the loss of the vehicle for him will mean the loss of not only comfort, but also income.

For example, a spouse works on the other side of the city, and transport runs irregularly, so in order not to be late for work, he needs a personal car. And the wife claims that she needs a car more, since every day she has to take one child to kindergarten, and the second to school, and all institutions are located far from home and from one another.

In such cases, the court in the vast majority of cases decides to sell the car and divide the proceeds from the sale equally between the spouses.

But many people are not happy with this decision, since it is not always possible to purchase two normal cars with the funds received.

This is where a settlement agreement can come to the rescue, in which opponents can agree on another method of division on mutually beneficial terms.

It must be remembered that when dividing property, it does not matter to whom exactly the car is registered if it was purchased during marriage. There are situations when the vehicle is registered in the name of the husband, he constantly uses the car, but the court transfers the property to the wife.

If a family had two vehicles, most often disputes arise over who gets which car. The following rule applies here: the one to whom the more expensive car is transferred pays monetary compensation in the amount of half the difference in the cost of the vehicles to the other party who received the cheaper car.

It must be borne in mind that having received possession of the car, in any case, you will have to pay the other party half of its market value.

Paying off a car loan after a divorce: the bank’s position

According to the car loan agreement, the borrower must notify the bank of a change in marital status, since this fact may affect the solvency of the client of the financial institution. The bank is primarily interested in ensuring that the loan is repaid in full.

In the event of a divorce and division of a car loan without the consent of the credit institution, it will not be possible to re-register the vehicle to another spouse who is not included in the loan agreement, since the car is pledged to the bank until the loan is fully repaid. To transfer the car to another person, the loan agreement will need to be reissued, and banks are not always willing to agree to such transactions.

To solve the problem, banks usually offer several options for getting out of this situation, namely:

• repay the car loan early and subsequently dispose of the vehicle at your own discretion or by court decision;
• continue to repay the loan in accordance with the payment schedule, dividing the payment amount in half;
• re-issue a car loan to the actual owner of the vehicle, but with the condition that his income will allow him to repay the debt in the future;
• refinance a car loan.

The division of property is not an easy process in itself; in addition, everything is complicated by the strained relations between the former spouses during a divorce. Dividing a vehicle, especially with an unpaid car loan, can become a headache for many months. Sometimes, without an experienced lawyer, citizens cannot understand all the intricacies of the division procedure.

It is quite difficult to draw up a legally competent statement of claim, which will take into account all the nuances of the case; not everyone knows what documents will be required for the court in each specific case. A voluntary agreement is also fraught with many pitfalls; usually the winner is the spouse who has received at least an initial free consultation from an experienced lawyer on the division of property.

Therefore, it is worthwhile, at least at the first stage, when documents are being prepared, to contact lawyers and consult on the following issues:

• what documents are needed to divide a loan car;
• how to write a statement of claim;
• what is the prospect of a lawsuit in a particular case.

FREE CONSULTATIONS are available for you! If you want to solve exactly your problem, then :

• describe your situation to a lawyer in an online chat;
• write a question in the form below;
• call +7(499)369-98-20 - Moscow and Moscow region
• call +7(812)926-06-15 - St. Petersburg and region

Source: https://ros-nasledstvo.ru/kak-razdelit-mashinu-pri-razvode-esli-ona-v-kredite/

How to Divide a Mortgage Loan in Divorce

Divorce is always associated with various difficulties and bureaucratic procedures. One of them is the division of property. Some divorcing spouses believe that only property is subject to division.

But the law states that jointly acquired debts are also included in the total property estate, which must be divided.

At the same time, there are simpler processes (for example, the division of a payment card loan during a divorce) and more complex ones, which, in particular, include the division of a mortgage loan during a divorce.

General principles of mortgage loan division

For Russians, dividing a mortgage between former spouses remains an acute and pressing issue. This is due both to the long-term nature of such a loan (which is why borrowers often have to repay it almost throughout their lives), and to the presence of expensive collateral, which is the property purchased on credit. The basic rules for dividing a mortgage are as follows:

1. If the loan was issued during the marriage, then it is subject to division.
2. The size of the share of each spouse is determined according to the situation. Provided that the rest of the property is also divided equally, the loan is divided in half between those divorcing. If the principles of division of property are different, then basically the loan is divided in proportion to the shares of each spouse. According to Part 3 of Art. 39 of the RF IC, the more property one of the spouses gets, the greater his debt will be.
3. The period during which the loan can be divided is three years from the date of termination of the marriage relationship.
4. Not only spouses, but also the financial institution that issued the mortgage agreement can initiate loan division. For example, if within three years from the date of divorce the ex-spouse, who took out a mortgage during the marriage, is unable to repay the loan, the bank may go to court with a request to divide the marital property and debts. Then the court may oblige the second spouse to pay the loan debt even after a certain time after the divorce.

Rights of the second spouse regarding mortgages and real estate

Determining the share of the second spouse when dividing real estate and a mortgage loan purchased on credit should take into account an analysis of the situation. It is necessary to take into account both the conditions for purchasing housing and repaying debt, as well as existing agreements between spouses. The main points that are determined by law regarding the rights of the second spouse are as follows:

• Initially, the second spouse has exactly the same rights to the property acquired on credit as the first. In this case, the loan debt is divided equally between both.
• If the second spouse expressed his protest to the bank in writing regarding the processing of the loan, the mortgage and collateral on it can be recognized in court as the personal debt and property of the borrower. In this case, the second spouse does not claim the property and does not participate in repaying the loan.
•  If the initial payment on the loan and/or the majority of the debt was paid by one spouse using his personal savings (gift, inheritance, money from the sale of personal property, etc.), the court may still recognize such a loan as personal. In this case, real estate purchased with these funds will also be classified as the personal property of this spouse.
• In the event of a dispute regarding the division of debt and real estate purchased on credit, the spouse whose rights are violated can go to court with relevant evidence.

Options for resolving the mortgage issue

You can divide a mortgage and real estate purchased with bank funds in different ways. In general, options for dividing real estate are similar to methods for dividing a credit car during a divorce.

Source: https://101.credit/articles/kredity/ipoteka-pri-razvode/