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

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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

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 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.


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