What to do about a private car loan from a family member and a marital separation?

UPDATED: Feb 22, 2011

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What to do about a private car loan from a family member and a marital separation?

My daughter went to my father for a car loan. She agreed to pay the loan off in monthly payments. He wrote a check to her for the amount. She and her husband put the car in his name. They are getting seperated and now her husband believes that he can continue paying the loan as per the agreement. I believe as the agreement was with my daughter, in order to own the car, a new agreement must be made. My father does not wish to carry the loan for him. In order to own the car, must he get a loan on his own and pay my daughter for the value of the car so she can repay her debt?

Asked on February 22, 2011 under Bankruptcy Law, New York


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

Who is the "he" in whose name the car was put? The father, who provided  the money? Or the husband?

If it's in the father's name, it's his car--at least until and unless the loan is paid off and he transfer the ownership, though you need to look to the terms of the loan agreement. The general rule though is that the person in whose name a vehicle is, that person is the owner absent special circumstances. The presumption is the vehicle belongs to whom it is titled to.

Similarly, if the vehicle is in the husband's name, the base presumption will be that it's his vehicle. As to who is obligated in that case to keep paying the loan, the answer is "it  depends"--with whom was the agreement made, and what does the agreement provide? It could have been made with the daughter, the husband, or both. Obviously, if this is an oral or verbal agreement (nothing in writing) and if the parties involved have different recollections, this can be very difficult to resolve.

The general rule is: look to the terms of the agreement. If those terms are ambiguous or there's no agreement on them, you are  potentially looking at litigation, if the parties can't negotiate to a mutally acceptable resolution, to solve the issue. In the future, always put agreements in writing, as precisely as possible, so you know what happens in different scenarios.

In this case, again, there's no easy way to answer, based on what you've written, as to who owns the car or who is obligated to pay the loan. You need to look at what was agreed to by whom.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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