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Join Date: Oct 2002
Location: SE PA
Posts: 3,188
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Finances, Divorce, Death--one for the lawyers.
Say a couple is married, and the man has a debt (say, an upside down car loan) in his name only. Let's also say it's the couple's only asset, so their net worth is, say, -$10,000. Assume no will, no heirs.
a) If he dies, does his wife inherit the debt? That is, is she obligated to repay the $10k assuming the car is repossessed? b) If he defaults on the loan and the car is repossessed while they're still married, does the wife have a legal obligation? c) If they divorce, and he dies shortly thereafter, the car is repossessed, does the wife have a legal obligation? And yes, this does refer to a real situation (simplified, but all the essentials are there).  Not me, thank God.
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10-13-2006, 04:39 PM
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Too big to fail
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Turn it around - if he had $10k in a CD, would the wife be entitled to it?
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"You go to the track with the Porsche you have, not the Porsche you wish you had." '03 E46 M3 '57 356A Various VWs |
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10-13-2006, 05:18 PM
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Join Date: Dec 2005
Location: Pine Mountain Georgia
Posts: 844
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A. yes, minus the amount car is sold for. Usually car is sold and they write off the difference. May hassle you for a while. Collection agency etc. Send them a copy of the death certificate and tell them thats it.
B. yes. Minus amount car is sold for. Some states vary on this. C. no, maybe. Did Loan Co. release spouse? Did settlement papers address this issue ie John to pay off the loan on the car. Again, what happened to the car? They have to credit you the amount it sold for. They are good at not reporting this. Make them prove it. Good luck.
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10-14-2006, 05:01 AM
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Location: SE PA
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Thank you--that's what I figured. It's truly a bizarre situation and a somewhat naive friend.
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10-15-2006, 04:40 AM
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Join Date: Mar 2003
Location: Charlottesville Va
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Actually, no. She doesn't inherit the debt, at least not in Pa.There is a "necessaries" act in Pa. which would obligate her to pay for housing expenses, medical bills etc, but not a car loan. If she didn't guarantee the loan, or its not a joint obligation, then no.
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10-15-2006, 02:40 PM
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Join Date: Jul 2004
Location: New England
Posts: 5,136
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I think no to all three, assuming the wife is not a signatory on the loan.
The debt is his obligation, his personally if he is alive, his estate's if he is dead. The only way for the finance company to satisfy that obligation are his assets, his estate's assets, or the car. The wife didn't sign anything and owes nothing.
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10-15-2006, 03:51 PM
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Location: SE PA
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Thanks, guys. Did some more searching and found this PA specific info: http://evans-legal.com/dan/faq.html#debts
In any case, it's clear she needs a lawyer, not just a friend who's good at Google and hangs out on internet forums. 
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10-15-2006, 05:31 PM
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Friend of Warren
Join Date: Oct 2000
Location: Lincoln, NE
Posts: 16,484
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The answer is no to all three questions. A spouse is not liable for the debts of the other spouse if their name is not on the loan, debt, note, etc.
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Kurt V No more Porsches, but a revolving number of motorcycles. |
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10-16-2006, 06:39 AM
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Kurt V is right, I am in the unique situation of being both a car dealer and an attorney-I no longer practice though- the spouse not having been a signatory on the loan and since the secured interest in the property was attached before the marriage would have no obligation to pay unless she wants to keep the car. If there is equity in the car she can sell the car and payoff the loan, I would not trust the bank to return the proceeds if there is any equity unless it is sold at an auction administered by a probate specialist, even then the buyers bid low and bids are accepted well below Actual Cash Value (ACV) because they have no real vested interest (they will get their money one way or another). Since the car in this case has already been repossesed she is under no obligation and she has no stake in the value of the car.
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10-19-2006, 07:12 PM
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