Dear Driving for Dollars,
My wife died. She had a car loan for her car, which was only in her name. What happens to the car loan and the car?
First of all, I’m very sorry to hear about your loss.
As for the car loan and the car, it depends largely on your state’s laws, especially whether your state is a community property state or not.
If you live in a noncommunity property state, then the car loan is most likely her responsibility alone. This means that the lender could not legally try to transfer the debt to you. However, it may be entitled to payment, depending on the terms of the car loan and your state laws.
If the lender is entitled to payment, then it might want to sell the car as a way to pay back the debt. Or, it could go after any assets from your wife’s estate or both.
In community property states, spouses are generally considered to be co-owners of all property and debt. Still, this does not guarantee that you are responsible for your wife’s car loan after her death because laws in community property states differ.
Your best bet is to hire an attorney who can explain the laws of your state. Provide a copy of the death certificate to the lender as well as the auto insurance company and your state’s department of motor vehicles as soon as possible, and make any payments on the car loan that are due until an attorney can provide you clear direction on your legal obligations.
Ask the adviser