It's quite common for families to lease vehicles. Though that can be fine in most circumstances, it can be tricky to handle in the context of a Massachusetts divorce case. So, what happens to a leased car in a divorce?
Car leases are very hard to alter or transfer, and they can be very expensive to terminate, often incurring huge penalty fees for those trying to get out from under their contract.
As a result of the difficulty in transferring or terminating leases, it is very common to have a couple decide to keep a car for the remainder of the lease. If this happens, the parties need to understand that it can be hard to remove one party from the lease. That means, for the duration of the lease there is a potential credit risk if the party who takes possession of the car does not pay.
If one party decides to keep a lease, how do you value that in terms of equitable division? Determining the value of the car is very difficult to gauge. Though a car seems to be a valuable asset, that is not necessarily true of a leased vehicle. Some people decide to value the lease at zero, given the monthly payments required for years to come, but many experts agree this is optimistic. Therefore, many cars actually have a negative equity, sometimes up to thousands of dollars. This is doubly true if this is the second or third leased vehicle and previous negative equity was rolled into the current lease. If a negative equity is included in the financial calculations, it means the party who assumes the lease will probably need to receive other assets to offset this negative balance.
Should you be in the midst of a divorce or contemplating divorce, contact the Law Offices of Renee Lazar either through email or telephone to schedule a FREE one hour no obligation consultation.