Cosigned a loan - help!

[eleven]

I made a terrible mistake and cosigned a loan for a friend last year. We have known each other for 12 years.

It's been a horrible situation the entire time. She's been overdue, had extensions, etc. I am constantly on the phone with the credit company and I am just so sick of the whole thing. I've never been in a situation where I owed money and it's very upsetting to me.

I just really don't know what to do. I don't want to pay it for her, because I could potentially be doing so for 4 years!

The only thing that reassures me is that it is only my credit being destroyed - my dh's is still good. We already have our mortgage, my car is paid off, we have healthy bank accounts, etc., so most likely, I will not need to apply for credit any time soon.

I do realize that I would still be responsible for the outstanding balance if the car is repossessed. I am hoping that she will make arrangements with them and it will not come to that, but I don't know what will happen.

What should I do? I am just so lost! Whether it's 5 years of late payments or a repossession, what will the effects be? How do I go about fixing my credit once this is over?

Any advice would be very appreciated.

[oldcrunchymom]

Can you pay off the part she owes? My grandmother had this exact situation happen when she co-signed on a car loan for my (incredibly irresponsible) cousin. I think what happened is she got the payments up to date, took possession of the car, and sold it. I'd have to ask her to be sure, but I know my cousin no longer has the car.

[2babybees]

If she can't or won't timely payments on the car I'd take it from her and sell it. Seems extreme but a bad credit rating can affect more than just your ability to get a loan. There are new laws in some states that allow your credit history to affect your insurance rates of all kinds and other things unrelated to credit/loans. Plus the emotional toll this is taking on you. If your friend cannot understand that it is not your problem. You can try to help her budget or setup a payment plan. If she wants to keep the car I'd have her make the payments to you and you take car of paying for the car so that she can't lie about the payment status. And so that there is a tangible person to face when she doesn't meet her deadline.

[eleven]

I had never considered taking the car and selling it. There's a lot to think about..

Thanks for your input.

[Amys1st]

I think you have been thru enough to not go into don't ever do that again- I hope DH knows because yes his credit can also be damaged.

What sort of discussions have you had with your "friend"? You could take her to court and I would send her a certified letter letting her know that.

[alicia622]

I'm also in favor of selling the car and reiterating...never again help a friend financially!!! Most of the tme, it ends up poorly

[eleven]

Oh, I have DEFINITELY learned my lesson! No worries there!

Whenever I get on her about it, she assures me that she's taken care of it.

It is her only source of transportation (there is no public transport in the area) and I know that she wants to keep it. That's not a question.

I'm not sure how I'd take possession of the car... I know she wouldn't just hand over the keys. Seeing as her husband is a felon who just got out of prison last month, I'd probably be a bit nervous as well!

If I were to sell it, I would probably need to pay the $5 - 6,000 between what's left on the loan and what the car is worth. I haven't seen it since she got into an accident a couple of days ago, so it could be worth less even.

I'm just trying to process everything. Thanks again for the input, I do appreciate it.

Oh, and for the record: yes, I was very naive (and a total idiot) when I signed for her, but her situation was much better at the time. She wasn't married to this guy and was stable. She had some old debt from school and I thought that was it. Things have gone downhill very quickly.

[Basylica]

Actually, according to judge judy (heh) there have been several cases in her court about this sort of thing and she always reccomends you either :

1 - take the person to court for the full ammt of the loan, and bring evidence that she's been late...ect. Just call up the loan co and ask for the payment history.
However, you run into the small-claims limit here, so you'll get MAX 3 or 5K depending on your state. If you win, she'll have to pay up the fee too for the lawsuit which again depending on your state is like 30-100 bucks.

2 - repo the car for non-payment (I think you'd need to wait until she defaulted long enough on this) and get it appraised by atleast 2 or 3 places on it's current value. Resell the car, take her to small claims and provide the judge with her history of non-payments, your impartial appraisals, and the documents on the sale of the car. If you did all this right, she should be responsable for the remaining balance of the car after the sale

Again, with the 3-5K limit though.

[eleven]

Basylica, thank you for the info! Judge Judy comes through, eh?

I'll have to check what the limits are in my state, but option 2 actually sounds pretty good.

[Emilie]

man- that just sucks all around.
What a friend
Emilie

[mrsfatty]

So are you really still friends?

Sorry about the situation!

[Treasuremapper]

She got into an accident? Do you mean she got into a car accident with the vehicle for which you cosigned the loan?

Where is her insurance money going to go?

[shelbean91]

Just FYI-

If the bank repos the car, they sell it at auction. You're STILL responsible for the difference between what they get at auction and the balance of the loan. Do whatever you can to not have the bank repo it. I would suggest small claims court also- or repo and sell it yourself.

[eleven]

I wouldn't call her a friend at this point, no.

The accident (from what I've heard) was just a little fender bender. It was not reported to insurance.

I'm aware that I'm still responsible if the car is repossessed.

Since I posted this thread, she has made payments on the loan. If she falls behind again and they call me, I'll discuss the situation with the loan company and decide what to do. Thank you so much for all of the information (and the chance to vent).

[Mariposa]

good luck getting this all fixed. it is a sucky situation. my little sister is doing this to her former boss. he co-signed on her auto loan and she is the only one on the title. she hasn't been making payments so he has so he doesn't ruin his credit. in florida, he can't sell the car or do anything but either let it default and then still be responsible for the loan or keep paying the payments like he is. i feel so sorry for him as he did so much for them and now she is just letting him make payments while she drives the car. argh.

i would check with your state and see if you can legally sell the car and what your options are. it is so sad that people with good hearts end up getting the shaft. sucks. s to you.