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Loan paid off, Have Title, Borrower unhelpful, Can't get lien released

My Ex had a loan on a car, paid the loan off, but never took the lien release to the Wisconsin DMV to get the title clear.

I got the car in the divorce, and it’s worth maybe $1000 at the time and $500 now.

DMV had no problem changing title to me, but kept the lien on there because my Ex didn’t have the papers to remove it anymore. I didn’t care much because I knew it was paid off and didn’t expect to have any problem getting the title to someone else just the way I got it.

Wisconsin change the law end of 2012 so titles go to banks on any new loans. But I had the title already, and the loan was paid off, so the bank didn’t want it or try to get it.

I went to give away the car to a relative and they can’t get it titled because DMV says there is a lien printed on it and the bank has to release it first. That wasn’t the case before 2012, but it is now.

The bank won’t talk to any non-account-holder. The account holder is not available to talk to the bank.

To summarize, the loan was long ago paid. The car is mostly worthless, but runs. The bank won’t talk to me to release the lien. The borrower won’t talk to the bank. The DMV won’t retitle until the lien is released.

Surely there has to be some process to getting a lien released when the bank has no claim on the vehicle anymore and the original borrower can’t be found.

What can be done to get this title transferred?

I don’t think we have a large Wisconsin contingent in this forum, so we’re not likely to know Wisconsin’s laws.

If the ex won’t cooperate, I don’t see a way out, but perhaps you should talk to a legal aid attorney who will consult for free.

Talk to your lawyer. You may end up back in court.

I too had problems after a divorce. We had two vehicles, the one she took had a loan against it, the one I too was paid off. I found out the hard way that I was still responsible for the loan… financial institutions are not bound by nor do they have to comply with divorce court orders. I spoke with my lawyer, and the only way out of it was to sue her to get a court order forcing her to take out a new loan in her name to pay off the original loan… a court order that she would have ignored anyway. So I gave the bank my blessings to repossess the car if she missed another payment, notified her that I had done so, and told her that she had two weeks to get a new loan and pay off the old loan or we were going back to court. She acquiesced, but punished me by playing with my visitation.

The other vehicle, the one that was paid off, was co-owned (two names on the title). I could not resell it without her signature. In NH, transference of title requires a bill of sale, so I was gong to sell it to my daughter for $10. Since my ex would not discuss signing the title, I simply waited until the truck was over 15 years old, which in NH meant no title was required to sell the vehicle. I then “sold” it to my daughter with a bill of sale and she retitled it.

Oh contrar. Quite a few from the north country.

Three things. Open an account and go talk to a VP to get a new lien release. Go to a judge and get a court order for the lien release or to compel the ex to fulfill the original judgement. If he did not provide a clear title, he did not meet the conditions of the divorse so could be held in contempt (if you can find him which if it were me you could not). Talk to your state banking commission if it is a state bank. Should be a simple matter. Now some banks, mine included, will absolutely not release any information on any account holder without permission, but they do need to respond to a court order or the banking commission.

We do have a lawyer on staff here but where is he?

Bing, you’re making legal assumptions that I found out the hard way may not be true depending on the state laws. Been there, done that. The OP needs to contact his lawyer for legal advice. We are not qualified to provide legal advice. Divorce laws are a mess, and leave numerous unresolved problems with titles and ownership unless both parties have high priced lawyers defining every detail up-front. Unless that’s the case, nobody gets the protection they expect. The laws do not provide it for them.

I found out too late that what my lawyer should have done was required as a part of the divorce decree that my ex get a new loan within a specified timeframe and clear the existing loan. Without having that in the decree, she was not in contempt of court. High priced lawyers see to these details… at a high cost, of course. The average works schmuck’s divorce lawyer just processes paperwork.

Thank you for all the feedback so quickly.

It seems that there should be some process the DMV could suggest to compel the bank to prove they have a lien on a vehicle, like a consumer can request a credit reporting agency to have a creditor prove a loan.

The bank wouldn’t have to respond about the account, just that they do or don’t have a valid lien on the vehicle.

What happens when banks go out of business and leave liens on titles all over the place? There must be something in place where if a bank fails to show proof, it can be taken off.


Don’t make this assumption. Legislative statutes and regulatory mandates are not designed to protect the parties of divorce, nor are the divorce laws. It’s up to the parties, guided by their lawyers, to ensure that the decree protects their interests. In truth, that happens in divorces where the interests are protected up-front by high priced lawyers, but not in the average divorce. The average lawyer isn’t going to put that time and effort into your protection unless you can afford to pay for it.

Banks going under involve armies of high priced lawyers to protect the banks, and there are regulations designed to protect investors large and small, but only in dreamland do they actually do so when the lawyers get involved. Most of the accountholder’s protection is in the Federal Deposit Insurance Corporation (FDIC) backing, which is basically a government backed insurance policy.

If you have the title for the vehicle, take it to small claims court. This will cost you around $25, depending on your municipality in Wisconsin. Explain your situation to the judge, but make it “clear and dry.” Don’t bring up issues, just state the facts and request a court order for release of information.

Any kind of court case is going to cost more in legal fees than the car is worth. How close are you to a state line? Just wondering if laws in a neighboring state may be a bit more lenient and a title change could be done there followed by a subsequent change in Wisconsin.

Regarding the small claims case, which may be feasible, who will be named defendants? The bank, the ex, the state motor vehicle commission, all of them?

Would a lowly small claims judge have the authority to rule against the state motor vehicle commission?

Just some random thoughts on it anyway. I’ve been involved in a couple of balky bank/title lien situations in the past and the banks were a royal pain in the rear.

The same, this is not about divorce but about the replacement of a lien release that was not provided to the now owner. All of the remedies require the bank to either provide a letter, or stamp the title. If they will do neither, either a judge or the folks that license the bank needs to light a fire.

I guess I would give the Wisconsin DOT a call and ask them what the next step should be if the bank will not cooperate with those remedies listed. Maybe with the new title and a copy of the divorce decree, they can take the lien off. Minnesota is different with the title going to the owner not the bank but the title not being clear until the lien is released.

Also might want to do the electronic search to see if the lien was taken off electronically.

From the DOT site: " What is a secured party required to send an owner when the lien is released electronically?
Statute 342.22(1)(b) states that the secured party shall deliver to the owner a notice stating that the release has been provided to the department. A letter on letterhead or a printed copy of the system generated confirmation that the lien was removed from Wisconsin DOT records are acceptable notices. If the title was held by the lien holder (effective date, July 30, 2012) a new title will be issued and mailed by DOT within 30 days of the lien being satisfied."

It appears to me that the bank may have reported the release electronically to the DOT so check that listing. They only have 30 days to do it according to the statute.

Wrong again. This is about financial institutions not recognizing… or having to recognize… a divorce decree. The vehicle was awarded by the court to the OP, and the laws do not require financial institutions to recognize it.

In this case, the OP’s ex is the owner. The financial institution has absolutely no legal requirement to recognize the OP as the owner even given the divorce decree, and will not. In their mind, on their records, the OP does not have legal ownership of the vehicle and they will only send the release to the person they recognize as the legal owner. It’s a hole in the legal system that one could drive a truck through. And it’s a very common problem in divorces.

Bing if you ever get a divorce I hope you get a good lawyer, and early in the process. You’re in for a lot of surprises. I could fill pages with the things I learned the hard way, but I’ll stick only to the car related question the OP asked.

The small court approach might work, but what I’d suggest is that the ex be the defendant, and the goal be to get the ex to get the release of lien from the bank and provide it to the OP. Small claims courts generally require a plaintiff, a defendant, both in court and present, damages, and evidence of damages. They will not generally order a third party (the bank) to provide a release of liability, and I doubt if it’s within their power to do so.

“In this case, the OP’s ex is the owner.”

OP is the owner (title holder), right?

Nope. The divorce decree gave the car to the OP, but the financial institution and the state don’t and are under no obligation to recognize the divorce decree for the purposes of ownership. To them, the OP’s ex is still the legal owner. And only the ex can thus transfer ownership, and the ex is the only one the bank will release the lien to.

Divorce laws are really, really messed up.

OP states: “DMV had no problem changing title to me…”

How is OP not the owner?

You’re right in that I erred on that detail, but the state won’t issue a title to him until he gets the lien released, and the bank won’t release the lien for him because they recognize him as the owner. I do know for a fact that financial institutions do not recognize a divorce decree as a determination of change of ownership. It is on that fact that the entire problem hinges.

I believe mountainbike is correct and it applies to a lot of areas other than cars and liens.

The divorce court and the lien-holder bank, or whatever, are oil and water. The court can rule on tax issues in the divorce also but that doesn’t mean the state tax commission or the IRS will go along with any of it nor do they have to.

Wisconsin is a little confusing, but that’s why I think she should talk directly to DOT. Like I said there are three remedies for getting the lien released. There is no reason for the bank to not stamp the title or provide a short statement on letterhead that there is no lien. I think a call from DOT in Madison could take care of it but if not a simple call from the banking commission could do it. They have no interest in the car. All they have to do is say it with a stamp on the title or a letter. The timing is unclear, otherwise they would be in violation of the statute for not reporting the lien satisfaction to the DOT.

By the by, banks are regulated. If they go belly up, most of the time the regulators arrange them to be taken over by other banks, or they supervise the shutdown. Its not like a Coast to Coast store going out of business. Records are not lost but are transfered as well as assets and liabilities. Banks respond to their regulators, but something is missing here unless the bank is really being obstinate so a fresh explanation from the DOT in Madison might shed some light on the issue.

Yeah, I don’t know about divorce but I know about business.

You are so right, OK4450. I learned that the only parties the divorce decree has any legal bearing on are the divorced parties. Only a good, experienced lawyer that sees a deep well of assets to draw from will be sure that the decree includes requirements that protect his/her client. If I’d have had a good lawyer and lots of assets I’m sure the decree would have prevented the problems I had after the divorce with loans, asset ownership, and other issues. But, alas, I did not. Without the assets to hire a good lawyer, you’re pretty much on your own. The laws won’t protect you. They aren’t designed to. And the court (magistrate or judge) won’t either.

I was naïve. I admit it. So I got royally screwed. Royally. But man, did I learn a lot!

The thing is everyone has rights, even bankers. So if a banker has two names on a loan, guaranteeing the loan, just because the judge says it now belongs to one person, that doesn’t mean the other person is off the hook. No bank will ever give up someone to go after until the loan has somehow been satisfied. So just because the judge says someone else is responsible doesn’t change the original contract or deal as far as property goes. That’s why you have to satisfy the loan or mortgage first and then get another in the separate name, etc. It would be irresponsible for a bank to do otherwise. Then throw in the ownership issues with stocks, 401Ks, pensions, etc. and I agree you can get taken to the cleaners by trying to be a good person.

I know someone who just cleared up a divorce related tax issue in their favor this past winter. It only took 5 or 6 years and a trip to court to hash that out… :frowning:

That particular issue was supposedly settled in the divorce which occurred several years before the legal wrangling began.