|
  Dear
Dr. Don,
My fiance's name is on the loan of his ex-wife's
truck. We have been in the courts to try to get the truck from her
and the courts were no help. We want to get a house together and
have found the house and will close very soon.
Now to the question. After we close on the house,
if we decide to have the bank repo the truck and pay the difference
after they auction it, will that affect our mortgage at all? Basically,
is it possible to lose the house over the truck? We just can't afford
to keep paying for a truck that we don't have. We have been dealing
with this for so long that the stress just isn't worth it any more.
Also I understand that the repo will stay on the credit for seven
years. Is that correct?
-- Harried Heather
 Dear
Heather,
Since his name is on the truck loan, if the truck is repossessed,
then the repossession will stay on his credit report for seven years.
A voluntary repossession, where he turns the truck in to the lender,
is slightly less expensive than an involuntary repossession and looks
a little better on a credit report, but if he hasn't been able to
wrest the truck from her to date, there's no reason to expect that
to change. If the note is in both of their names, then repossession
will affect both of their credit histories.
What's not clear to me is whose name, besides the
lender, is on the truck's title? If your fiance and his ex are both
named on the title, then she's co-owner of the truck. That could
be why the courts were of no help in getting you the truck back.
If the divorce decree spells out your fiance's obligation
to keep up payments on the truck for his ex-wife's use, then she
may be able to sue him for not keeping up with the payments. The
lender isn't a party to the divorce decree, so its terms don't affect
the lender's options, but the divorce decree can affect your fiance's
finances.
The truck getting repossessed after closing won't
trigger a foreclosure on the mortgage. Until then he should stay
current on the truck payments. Since he's planning to pay what's
owed to the lender after the truck has been sold, then he's no worse
off by doing this.
And that's where all of this breaks down. If
your fiance is going to make the lender whole after the repossession,
then all he's really hoping to do is capture any value in the truck
and get the truck away from his ex. He should expect the lender
to sell the repossessed truck wholesale at auction, diminishing
that captured value and increasing what he will owe the lender.
Depending on how many payments are remaining, he could be worse
off with having it repossessed than by continuing to make the payments.
|
