Dear Driving for Dollars,
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I defaulted on about $3,600 on a car loan that was co-signed by my now ex-wife. When I defaulted, the finance company came after her for the money. She opted to pay them by taking out a loan, and now she wants me to repay that loan. I am fine with repaying her; it's just that I can't afford her terms.
She says she will take me to small claims court and get the judge to garnish my wages. Does she have the right to do that?
Yes, your wife probably does have a right to take whatever measures she needs to get you to repay the car loan she paid off on your behalf.
It can vary on how co-signers on car loans are viewed, but it's most likely that as a co-signer, your wife was equally responsible for paying off your car loan. When the finance company contacted her to say you defaulted, it was probably up to her to either take responsibility to pay the loan or find her credit adversely affected. In that case, she is well within her right to require you to repay the loan, including taking you to court if the two of you can't work it out on your own.
What is not clear is whether a judge will side with her or with you about what you can afford in paying back the car loan. It is certainly possible that a judge could rule in your ex-wife's favor, but it is not a guarantee.
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