Unfortunately, in some divorces, a spouse may try to sell a car for their own personal gain. In my practice, I have seen spouses drain and then close bank accounts, hide money, open up a secret bank account, forge a spouse’s signature to sell a car, and even secretly refinance a home and spend the equity without the other spouse’s knowledge or consent.
If you have any concerns that your spouse is selling off marital assets, this article will help you understand your rights and give you some answers as to what you can do.
Can a Spouse Sell a Car Before a Divorce?
Generally, a spouse is allowed to sell a car before the divorce is filed, as long as the car is not being sold for the spouse’s own personal gain in anticipation of filing for divorce in the near future.
If a husband sells a car to have cash for an upcoming divorce, the court will likely define the sale as a “dissipation of marital assets.”
In general, the intentional dissipation of marital assets is when one spouse conceals, sells, or wastes marital property for their own benefit when the marriage is falling apart.
Each state’s laws differ on what constitutes the dissipation of marital assets. But, in general, most states require four elements:
- Whether the expenditure benefited the marriage or was made for a purpose entirely unrelated to the marriage,
- The timing of the transaction (was it during a period of time when the marriage was falling apart?),
- Was the expenditure excessive or minimal, and
- Did the dissipating spouse intend to hide, deplete, or divert the marital asset?
While not all states have identical elements for dissipation, there is a commonality in what courts look for when determining whether dissipation is present.
Example of Dissipation of Marital Assets
Let me give you an example. Suppose a husband sells a car for $35,000.00 before the divorce is filed and places the money in a bank account in his name alone. He intends to hide the money from the divorce assets and use it to start his new life.
If the court finds that the sale was for his benefit alone, the court will label this sale a wasteful dissipation of a marital asset. As a remedy, the court will consider that the husband still has the $35,000.00 and include that as a portion of the marital estate he has already received.
Can I Stop My Husband From Selling Our Car Before the Divorce?
As it relates to the sale of a car, the law will require that all titled owners sign off on the sale. If you are concerned that your spouse may be attempting to sell an asset to gain leverage for an upcoming divorce, you can stop the sale by refusing to sign the title.
Can a Spouse Sell a Car During the Divorce?
Generally, whether a spouse can sell a car while a divorce is pending will depend on the law in the state where you live. Some states have an automatic injunction that prevents the sale of any significant asset, including a car, without the other spouse’s consent or the court’s permission.
In other states, there is no automatic injunction, and the spouse may be able to sell the car, but again, will be subject to the law relating to the dissipation of marital assets.
Using an Injunction to Stop The Sale of a Car During a Divorce – How Do Automatic Divorce Injunctions Work?
A few states have enacted automatic injunction laws. These laws automatically impose mandatory injunctions against both parties upon filing for divorce.
These injunctions prevent the spouses from “transferring, encumbering, concealing, selling or otherwise disposing of any of property of the parties” while the divorce is pending.
As soon as a divorce petition is filed, it will be processed by a court clerk. The clerk will prepare a summons to have the notice of the divorce petition served on the other spouse.
As soon as the divorce is served on the spouse, an automatic injunction goes into effect.
The injunction’s goal is to keep things as they are so that nothing significant transpires while the divorce is underway. In most states, the following orders are mandated by the court and apply to all divorce cases:
- Neither party may transfer, encumber, conceal, or dispose of any marital property without the other spouse’s permission.
- Neither spouse may harass or disturb the peace of the other spouse.
- Neither spouse may take the child out of state without the other spouse’s consent.
- Neither spouse may do anything to cancel or modify health, homeowners’, renters’, automobile, or life insurance for the spouses or the children.
The injunction rule contains an exception for spending money that is “in the usual course of business” or “for the needs of life.”
“Usual Business Practices” Exception
The “usual course of business” exception typically applies to allow the spouses to spend money the same way they always have or in a manner that is close to it. This means you can spend money the same way you were before the divorce was filed.
“The Necessities of Life” Exception
The “necessities of life” exception relates to expenditures needed to keep the marital estate in good condition. This includes things like food and other living expenses. Including expenses for car payments and other bills. While your divorce is pending, you can still cover your regular living expenses.
When Does the Injunction Go into Effect?
The injunction goes into effect the instant the spouse is served with the summons and the divorce petition. The timing of filing for divorce and serving the divorce papers is important.
If you believe that your spouse is hiding money or selling assets for their own personal gain, consider filing for divorce as soon as possible. If you think your spouse has or will engage in tactics to sell assets and hide money, you should have the lawsuit served as quickly as possible.
What if You Live in a State with No Automatic Injunction? Can You Do Anything to Prevent the Sale of a Car During a Divorce?
If you live in a state that does not have automatic divorce injunctions, your remedy will be to file a motion for an injunction with your local family court when you file the divorce petition.
If your spouse has made threats to empty your bank accounts, cancel your credit cards, sell assets and keep the money, or take other steps to hurt your finances, you may want to file a motion and ask the court to issue a financial restraining order injunction against your spouse.
How to Obtain a Financial Restraining Order
Depending on your jurisdiction, a motion for a financial restraining order must be submitted with the assistance of a lawyer. The court will determine whether to issue a restraining order based on the likelihood that your husband has done or will do something wrong to hurt you financially.
For example, you will have a strong case for a restraining order in your divorce if you can show that your husband emptied your joint bank account out of spite and anger. If the judge issues a financial restraining order, it will go into force immediately. You must go to a hearing and show proof to get a financial restraining order.
What Happens if There Is a Violation of the Financial Restraining Order?
Any financial transaction conducted outside the ordinary course of business following the issuance of the financial restraining order violates the court’s ruling.
If you believe your spouse has violated the order, you may submit a motion to hold the other spouse in contempt of court. If a judge finds a spouse violated a financial restraining order, the court could take control of the specific asset, take steps to freeze accounts and order the spouse to pay the other spouse’s legal fees.
When deciding if a spouse has broken the restraining order, the court may look at the intent behind what the spouse was trying to do and what happened as a result.
Conclusion
When a spouse sells assets before or during a divorce, it makes it harder for the court to divide the couple’s property in a fair and equitable way.
If you have concerns that your spouse is selling off or hiding assets, you should speak with a skilled family lawyer in your state.