You can forget about what it says in the divorce decree if you cosigned for a bad credit car Check for yourself

As a cosigner for a problem credit auto loan you need to understand that a divorce decree is a form of outside agreement.

We actually do understand due to our involvement for the last two decades in bad credit car sales here at Auto Credit Express. It’s also why we designed our website so that applicants could research issues such as the horrible credit auto loans process and loans after bankruptcy as well as today’s topic, the impact of divorce on a cosigned loan.

A divorce decree

We sometimes receive questions regarding divorce decrees that make one of the ex spouses solely responsible for a car loan that was originally cosigned.

Usually, if the spouse that was made responsible for the loan isn’t making payments, the other original cosigner wants to know if this will affect his or her credit history and FICO scores – especially considering they’re listed in the divorce papers as no longer responsible for the loan.

So here goes:

Outside agreement

When a loan is approved, it’s based on the information provided in the loan application. Once the loan documents are signed, the agreement is then considered to be a binding contract.

Due to this pre-existing agreement, even if a judge rules that only one spouse is responsible for a bad credit auto loan that and enters that stipulation into the divorce decree, the lender can still hold both signers jointly and individually responsible for the loan.

In this case, the divorce decree is an outside agreement that was made after the loan was executed. Since the decree is not part of the loan contract, both spouses continue to be responsible for all loan payments.

As a result, if any loan payments are late or if the vehicle is repossessed, this information will be reported to the credit bureaus under the social security numbers of both individuals and will lower the credit scores of both. In addition, the lender can legally collect any remaining contract balance, plus all fees, from either or both co-signers.

The Bottom Line

If you are involved in a divorce and have joint accounts with your soon-to-be ex, be sure to close those accounts and pay the balances on time. Better yet, before the divorce is final, be sure all joint loans are refinanced under an individual name – making just one person legally responsible for each loan.

And remember that Auto Credit Express specializes in placing applicants with bad auto credit with dealers that can offer them their best chance at getting approved for no credit auto loans.

So if you’re ready to take that first step in improving your car credit, you can begin now by filling out our online car loans bad credit application.

This entry was posted and is filed under Auto Loans, Bad Credit, Lender Companies. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.