My wife got a car with her dad, she is the primary, and he cosigned the loan before we got married. We got married 4 months after the car was financed. My question is, if the car is repossessed will they be able to garnish my wages?
Resolving Spouse A's liability for debt incurred by Spouse B can be tricky, especially when the debt is acquired before the marriage. Family law varies tremendously from state to state, and even the community property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin) vary in their approach to answering the pre-marital debt question.
With the understanding that your state's laws may trump the general rule, generally speaking because a spouse did not co-sign the loan, that spouse is not a party to that transaction and as a consequence will not face liability if the signor defaults on the loan. Many creditors do not go to the trouble of suing both spouses, as doing so tends to complicate the legal process involved in obtaining a judgment.
However, as I mentioned, your state may have different rules, and you need to talk to an attorney who specializes in family law in your state to get a more accurate answer that reflects your state's laws and your particular facts.
Let us talk about the repossession. The primary problem with repossession is that the owner will likely be left owing a deficiency balance on the loan, meaning that your wife may still owe a significant amount of money to the lender even though she no longer has the vehicle.
When a vehicle is repossessed, the lender usually sells the car at auction, and applies the amount it receives at auction to the balance owed on the loan. The borrower is generally responsible for any amount of the loan which is not covered by the auction proceeds. The problem is that lenders usually sell repossessed vehicles for significantly less than the cars are actually worth, which can leave a borrower owing thousands of dollars for a vehicle the borrower no longer even owns.
To learn more about auto loans, I encourage you to visit the Bills.com Auto Loans page.
To learn more about spousal liability of credit card debt, read Is My Spouse Liable for My Credit Card Debt?
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