Liability for Extension of Credit to Spouse

Question: Am I liable for a deficiency on my ex-spouse’s repossessed vehicle? In 2006 my then-spouse purchased a vehicle. He defaulted on the payments and the bank repossessed the vehicle. Now the bank is suing me for the rest of the balance. The contract was under his name only.


Answer: First, make sure you do not default.

If you did not sign the contract, it should not be possible to hold you liable. While there is a state Family Expense Act which makes one spouse liable for necessaries furnished to another, the federal Equal Credit Opportunity Act allows each spouse to contract for credit without involving the other. The federal law should take precedence in this situation. This is something that you need an attorney to argue.

Also, the contract may either be a retail installment contract (husband agreed to pay the car dealer, who assigned the contract to a bank) or a note (husband borrowed money from a financial institution of his choice, and used the money to pay the car dealer). The statute of limitations on a retail installment contract is 4 years from default/ last payment. The statute of limitations on a note is generally 10 years. If it is a retail installment contract and your ex-husband defaulted more than 4 years ago, any claim is barred by limitations.

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