Cars and divorce in Illinois

Russell Knight

Russell D. Knight has been practicing family law as a Chicago divorce lawyer since 2006. Russell D. Knight amicably resolves tough cases while remaining a strong advocate for his client’s interests.

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  1. […] are many kinds of debt that people can hold when they are going through a divorce: home mortgages, auto loans but the most common is credit card debt.  Credit card debt can be in one spouse’s name or both […]

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Cars, Trucks and Motorcycles In An Illinois Divorce

Cars and divorce in Illinois

An average person’s assets are usually relatively simple.  The average person may own a house, the average person might have a retirement account but the average person almost certainly owns some kind of automobile. So, what happens to a car, truck or motorcycle in an Illinois divorce?

Is An Automobile Marital Property In An Illinois Divorce?

If a car, truck or motorcycle was purchased prior to the marriage, that automobile will stay with the person who purchased the automobile after the couple divorces.  The date of purchase can be easily proven by a receipt, registration or car title.

Any asset that gets purchased during a marriage is presumed to be marital property.  “Purchased during the marriage” means anytime during the marriage.  That period of time where purchased property becomes marital property includes the period after a couple has separated or filed for divorce.  The day the presumption of marital property stops is the day the divorce is finalized and the judgment of dissolution of marriage is filed with the domestic relations court.

Marital property is divisible by Illinois divorce courts.  But, how do you divide a car, truck or motorcycle in an Illinois divorce?

In 95% of all cases, you don’t divide an automobile even if it’s marital property.  There are several reasons why dividing an automobile (the value of the automobile, really) never happens in an Illinois divorce.

Automobiles and Secured Debt In An Illinois Divorce

Most automobiles are paid for by financing. That is, when the automobile is purchased, the car buyer takes out a loan to pay for the car.  This loan is secured by the car, itself.  So, if the car buyer does not pay the loan in a timely manner, the automobile financing company can pick up the car with a tow truck. 

So, there is almost always a loan attached to an automobile.  The loan cannot be separated from the automobile until the loan is paid off.

This creates some weird math.  The moment the car is driven off the car dealer’s lot, the car’s value drops…but the loan amount does not.  So, a car is perpetually owned at a value less than the car loan attached to that car.

So, in a divorce, a car really has zero net value so long as there is a car loan attached to that car. 

If the loan has been paid off, then the car may have some value that an Illinois divorce court may consider divisible.  But, after 5 years, most automobiles do not have much value in them.

So, if a party to a divorce is willing to be responsible for an automobile loan, they always get to keep the automobile attached to that loan.

Refinancing a Car, Truck Or Motorcycle After A Divorce?

If one party is keeping an automobile with a secured loan attached to it, the secured loan may still be in both parties’ names.  The party not keeping the car, is not going to want their name attached to the loan after the divorce is finalized.

The only way to remove a person’s name from a loan is to pay off the automobile loan or refinance the automobile loan.

If there is some kind of cash left over in the divorce’s division of assets, money may be “taken off the top” in order to pay off all outstanding marital debts.  This will leave the now-paid-off automobile as an asset with value and that value may need to be divided. 

Refinancing an automobile in one divorced party’s name is apparently possible, but I have never heard of it being done in my 14+ years as a divorce attorney in Chicago, Illinois

More typically, Illinois divorce lawyers include language in the Marital Settlement Agreement that says “the party shall be responsible for all payments associated with the automobile and indemnify and hold harmless the other party therefrom.”  This means that the party that keeps the loan MUST pay the loan in a timely manner.  If that party does not pay the loan in a timely manner, the other party can back to divorce court and ask that the party be held in contempt of court for violating the final divorce judgment.  If found in contempt, the other party will be responsible for your attorney’s fees and other court-imposed sanctions.

The Value Of A Car Is Too Difficult To Determine In An Illinois Divorce.

Marital property can be divided in an Illinois divorce. So, if an automobile is marital property and has some kind of value, the automobile’s value can be divided by an Illinois divorce court.

This never happens because the value of a car is always too difficult to determine or depressingly low. 

A quick Kelly Blue book search will reveal multiple values for the same car based on various factors: condition, mileage, trade in vs. direct sale.

An Illinois divorce court will not supervise the direct sale of a 1996 Toyota Corolla to determine that an appropriate price was reached for fair and equitable distribution by the courts.

So, the value of a sold car is almost always less than the actual value of just keeping the car.

Most divorcing couples in Illinois do the logical thing.  Each person keeps their car and the parties to an Illinois divorce do not try to equalize the values of those vehicles through the exchange of other property.  The accounting is simply not worth the effort in most Illinois divorces that involve automobiles.

How Do You Value An Automobile In An Illinois Divorce?

Of course, some automobiles are collectors items and do have significant value.  These automobiles cannot be turned over to CarMax for an estimated value or researched in the Kelly Blue book.

But, there are hundreds of similar models for sale on the internet that can approximate the value of cars with the same year, make and model.

But, you cannot bring in an internet listing to court to prove the value of an automobile in an Illinois divorce. 

The Illinois rules of evidence require that any evidence provided to the courts must be authenticated and if it’s not your listing, you cannot testify as to what the listing is and what it means.

Alternatively, you could hire a classic car broker as an expert witness to testify in their expert opinion what the automobile is worth.  This is overly expensive and not realistic.

In reality, classic cars and any other object of value, whether it’s a diamond or a faberge egg, should be estimated and those estimates negotiated by agreement by the divorce attorneys. The final negotiated values can be stipulated to so their value is no longer an issue and the distribution of those items and their fixed values is the only issue left before the court.

If an asset’s worth is truly in dispute in an Illinois Divorce case, there is only one way to truly resolve that issue…you sell the asset through a third party broker.  What the asset sells for is the value and that value will be divided equitably by the Illinois divorce courts.

Transferring The Title Of Your Car Into Your or Your Spouse’s Name After An Illinois Divorce

Cars and other automobiles are usually registered in only one person’s name in Illinois. 

If you get divorced in Illinois and you keep your automobile, that was only in your name alone, you don’t need to do anything.  The car was yours and the car remains yours.

If, via the divorce process, you retain a car that is in your spouse’s name, you’re going to need to transfer the title and registration to your name.  This is done electronically through the Illinois Secretary of State’s office.

There should not be a transaction tax imposed by the State of Illinois if you are transferring this property pursuant to a divorce decree.

If there’s an outstanding loan against the car, it’s likely that neither of the divorcing parties hold the title to the car.  The lender actually holds the lien to the car and you have to wait until the loan is paid off before transferring the title.

What About Boats, Recreational Vehicles, Trailers and ATVs?

All of the same analysis applies for any kind of moveable equipment in an Illinois divorce. 

Mobile homes, while not truly real estate have additional tax liabilities that need to be resolved before transferring from one party to another. 

Car And Automobile Insurance And Divorce In Illinois

Every automobile in Illinois must have liability insurance by law.  If the parties to a divorce stop paying the car insurance against one of the marital cars, that’s essentially against the law.  Additionally, the risk of an uninsured automobile accident risks dissipating marital assets. For all of these reasons, you are not allowed to cancel your or your spouse’s automobile insurance during an Illinois divorce.

Should your spouse cancel your car insurance during your Illinois divorce, you’ll need to file a motion to reinstate the insurance via a motion to maintain the status quo.

Honestly, in such a situation, it’s just easier for you to start paying your own car insurance.  All of the money spent on necessary living expenses will be considered marital money so it really doesn’t matter who pays for the car insurance.

Who Gets To Use Which Car During An Illinois Divorce?

During a divorce, a marriage that has one or multiple automobiles must determine who will have the use of those automobiles until the Illinois divorce judge makes a final allocation of the automobiles along with the other marital assets.

If one spouse seizes control, conceals or otherwise takes an automobile during a divorce, the other spouse can file a motion to maintain the status quo that they will still have an automobile to perform necessary tasks such as going to work, picking up kids, etc.

Can I Buy A Car During An Illinois Divorce?

You can buy a car during a divorce. An Illinois divorce judge won’t look twice if you buy a car similar to the previous car you owned.  Especially if you traded in your old car to buy the new car.

If you’re financing the car and you’re willing to remain responsible for the debt against the car after the divorce, you’ll also have no problems.

The only issue is if you buy a very expensive automobile for case or with a big downpayment.  That downpayment will be allocated to your half of the equitable distribution of marital assets…and you probably won’t get a credit for taking on the debt.

If you’d like to learn more about what will happen to your car, truck, motorcycle or other automobile in your Illinois divorce, please contact my Chicago family law firm for a free consultation.