Advice After Co-signing Goes Bad

When you co-sign you are responsible for the payments just like the signer is. You are saying that if the first on the loan can't pay then you will. So she either has to pay or her credit will take a big hit. If I were her I would call someone to get the car fixed, pay up what she owes and then keep paying monthly until she can sell it. That would be the best thing to do.

Hi A. B first of all your friend's daughter sounds very selfish. Your friend may just have to take a loss on this and pay the loan off to save her credit and see if she can repair it and sell it. And this also should be a lesson learn and that's for anyone. Don't cosign for anyone that's the best way to lose a friend or family member friendship. But your friend(like most parents) was trying to help her daughter out.

Although it sounds like the car is not worth much, she might try to sell it and then come up with the difference if she wants to save her credit. If she is in good standings with a small local bank or credit union they may give her the difference and she will need to pay it back. But most of the bigger name banks, Chase, Bank of America, etc usually won't negotiate. If it gets re-poed it will be on her credit for 7 years and she will still have to pay the diffence from what the bank sells it for. If the bank sells it for 3000 and she owes 7000, they will come after her and her daughter for the difference.
There is a financial guy who is on the radio on 1220 am at 1pm and goes until 4pm. Dave Ramsey is his name and it sounds like your friend really needs to tune in. He talks a lot about this kind of stuff. People are always calling in for advice and he is a straight shooter. She also sounds like she needs to get the book Boundries, to handle what her daughter has done to her. And it will also help her not do this kind of thing again.
I feel for your friend. After my dad died, my brother came to me and asked me to co-sign. He had all of the family give me a guilt trip about how my dad would have wanted me to help him with a second chance. He defaulted on the loan 6 months before it was due to be paid off and it was re-poed. Not only is it upsetting to ones credit, but that someone they love would betray them and seem to not even care is VERY hurtful.
Hope this helps.

If the car gets repossesed, than your friend will take the hit on her credit and that's not good. She will also be responsible to pay the difference of the cars value and the amount owed. If she owes $15,000 on the car and the bank appraises it at $10,000 - your friend will still owe the $5000 difference. She should've have made the payments when her daughter was unable to....that's what you agree to when you co-sign.

your friend made a big mistake. there's only 2 things she can do. one is to keep her credit in good standing by making the car payments herself or ruin her credit by letting the car get repossessed

I haven't read your other posts, but know if you get a car reposessed, you are not off the hook. The bank will sell the car at auction, and she will be responsible for difference between what is owed and the amount it sold for (the bank will take her to court and sue her for the amount). In our economy, this is not a good scenario. Also, she will be responsible for towing and misc. fees. It is not just the mark on her credit. It is a hard situation-- sorry she is in it. It would be best to contact the bank and try to work something out. Many banks have more flexibility right now due to the high number of people who are defaulting on their loans.

Your friend might want to consult a lawyer before taking any action. My mom just went through this with my brother. They did talk to a lawyer. They said if my mom was not on the title of the vehicle, she would PROBABLY be ok.. If the car company repossesses it, then the car will be auctioned off, then the remaining amount owed on the car will either be billed to her or her daughter. The remaining amount will have to be paid within a certain amount of time (just like a normal bill). Now keep in mind lets just say the daughter still owes like $10,000 on this car. And they sell it at the auction for $50 (yes it is possible), they will be stuck paying the $9,950 plus any additional fees that the company decides to tack on. My best advise is to go talk to a lawyer and see where the mom stands. Have her take in the loan agreement that BOTH of them signed and have the lawyer look it over. By any chance did your friend have any health issues right around the time she cosigned??? The ONLY reason I am asking is because the lawyer will want to know because that could mean the difference between the mom being "free and clear" of this mess or being stuck with what she's done.

Hi A.,
Well, I would just let the car get repossed. No, it might not look good on credit. If we keep doing everything for our kids then they will not learn the responsibility they need. I know, it is hard as a parent but sometimes that's what we have to do. They get to old for spankings so they have to learn in other ways. I have 5 kids of my own so I understand.
Good Luck,
J. J.

First she should have kept the car in her name but that is hind sight. Second it was her daughter. We are suppose to trust our children and hope that they do the right thing. ((I would co-sign for my son but then our son just chooses to drive my husbands spare truck instead of spending his own money.)) Most parents would just write it off as a mistake in judgment and pay the balance to save their credit.
She can repossess a car from someone who lives out of state. She can also take someone to small claims court that lives out of state. But even if you win good luck on collecting. If she lets it get repossessed the car place might come after her for the difference between what they can now sell the car for and what she still owed.
If she wants to save her credit she better just chalk this up to a lapse in judgment and pay the balance, thus saving her credit.
Lastly this happened to my husband back 25+ years ago. he co-signed for a so-called friend. It was only $350 but that was a lot 25 years ago. He ended up just paying it off to save his credit. The collection agency can after him and has served him with small claims papers so he just paid it off. It was tough on us because that was a lot of money for us. We had just gotten married, etc. But we really think we made the right decision.
Good Luck to your Friend....

Been there and done that and yes it will go on the mothers credit and they will go after the mother for the unpaid balance after they reposses it and sell it. She can sue her daughter but since she did co signed and knew that she would be responsible for the payments if the daughter didn't make them she is really up the creek without the paddle or the boat. I am sure she will never co sign again and she should really let her daughter know how this will damage her credit as well as their relationship. The daughter woud no longer get any financial help from me as her mother. Especially since she is just going to buy a new car with her tax money and not even attempt to settle things with the car her mother signed for. We all live and learn.