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Thread: Do co-signers have any "rights"?

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    Default Do co-signers have any "rights"?

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    Last edited by LoveSexMoney; 05-17-2008 at 03:43 PM.


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    Default Re: Do co-signers have any "rights"?

    He is fucked. When you co-sign you are responsible for the satisfactory completion of the note.

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    Default Re: Do co-signers have any "rights"?

    Quote Originally Posted by FBR
    He is fucked. When you co-sign you are responsible for the satisfactory completion of the note.

    FBR
    Sucks, but true!!!^^^

    A former co-worker of mine went through this same thing. He and his wife got keys for the vehicle (I think they called the manufacturer, and had them send/call-in the keycode to the dealership), "stole" the car from the girl (told her after he had it), and sold it in less than 2 weeks.

    I think he may have been a "co-borrower", which is a little different than a co-signer, but it may still be a legal and sneaky option if the guy needs to go that route.

    I mean hey... "this girl not concerning with us, we not concerning with this girl"
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    Default Re: Do co-signers have any "rights"?

    He could also make the payments, take the car back and then SUE the girl for the payments. He is better off taking the car away (she cannot report it stolen since he is on the loan and can prove she's not making payments) and selling it...then going after her for the money. He should not let it go because as you said, it'll show up on his credit report.

    The lesson here is never co-sign on a loan for a girl/boy friend.

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    Default Re: Do co-signers have any "rights"?

    If he is a co-signer, I am sure that he has legal rights to that car. Being a co-signer means being part owner. Does he have a set of keys? Does he know where she keeps it? He doesn't even need keys...just producing the signed paperwork where it's showed he's signed for it, he can have it towed somewhere.

    But, I don't know what state this is happening in, so I can't say for sure if he could do this. He's better off calling the police department or even a lawyer and asking them. I know he can sue her for not making the payments as agreed. What would have really helped him is if he made her sign a legal contract with HIM saying that if she failed to make any payments, then he would legally repossess the car from her.

    So, in some states the co-signer CAN take the car back...in some states they cannot do it that easily. He's better off asking someone in his home state what the rules/regs/laws on that are.

    Oh, and he does have a copy of the signed contract and all, correct? He's going to need it to prove "ownership".

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    Default Re: Do co-signers have any "rights"?

    ^^ a co-signer attemting to 'repossess' a car that has NOT been officially foreclosed on by the lender yet gets into a dicey legal area (sorry to say). Unless there is some official record that the loan is in default, the legal right of a co-signer to take the car away from its 'legal owner' against the 'legal owner's' will is debatable at best.

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    Default Re: Do co-signers have any "rights"?

    ^ Yes, in some states. It's always better to bring the situation up with a lawyer or a cop who knows. Some states are lenient about it, and as long as you can PROVE that the "owner" is in default and that you co-signed on the loan, they won't do anything. But, SOME states won't let the "co-signer" get the car for any reason...without getting a court order. So, you really need to find out what is allowable in your own state.

    I would suggest, though, that he take the ex to small claims court (anything under $5000 damage is small claims) and get a court order for her to turn the car over and pay the co-signer back for the defaulted amount. That way, he'll have a judgement against her and he'll have the car back.

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    Featured Member Vamp's Avatar
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    Default Re: Do co-signers have any "rights"?

    I agree with everything said here.

    Co-signers are just as responsible for the loan as the orginal signer. Dont feel bad though alot of people make this same mistake. As far as you credit is concerned the damage is done. You both have two late payments on your credit report. I would take it to court before she defaults on the whole loan. From the sounds of it she is just one payment away from doing that. I would just force her to sell the car by court order. Stating also that because she has ruined your credit that you should recieve all the proceeds from the car.

    Take it also as lesson learned. Never ever co-sign for a loan. If you do and there is a split it is best to force (thru legal means) the other party to sell it or refinance it.

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    Default Re: Do co-signers have any "rights"?

    I am wondering, though...why the credit company did not contact the co-signer on the loan when the loan originally went into default? They usually contact both the owner and the co-signer. Did he move and not update his info?

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    Jay Zeno
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    Default Re: Do co-signers have any "rights"?

    I wonder about the handwringing by co-signers sometimes. "Hey, I signed saying that I'd be responsible, and then the bank came after me for it!" Well.... yeah.

    I've cosigned on a car once for a close relative. I took an extra key for myself and made it clear that if they ever put my budget and/or credit rating at risk, I would do what I needed to do. I guess that's being a cold-hearted bastard, but when you co-sign something, you're essentially giving away your financial wherewithal without getting anything in return except gratitude (sometimes) and maybe a successful item on your credit report if the obligation is paid off on time. So those are the conditions that went along with my charity.

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    Default Re: Do co-signers have any "rights"?

    The failure rate of people who need a co-signer to pay off a loan by themselves is three out of four. That's precisely why I've never done it, even for relatives. If I can't deal with the possible worst case scenario, its simply not worth it.

    Hell, if a loan amount is small enough, I'll lend the money myself, interest free no less, before co-signing a loan.
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    Default Re: Do co-signers have any "rights"?

    Well, right now there are two parties with a financial interest in the car - the bank and the co-signer.

    Registration doesn't mean anything - all that says is that you paid the taxes, passed inspection, and are insured as required by law to to drive it on public roads.

    It is all about who's name is on the title. Right now - that is likely the bank.

    So it falls down to the agreement between the bank and the loan holders.

    That basically says - irregardless of who has the car - the co-signer has agreed to pick up payments if the primary signer fails to do so.

    I would think it possible that the co-signer could take possession of the car AFTER it has gone into default AND has an agreement with the bank that they will take possession of the car. This is big legal voodoo and a lawyer will definitely be needed - simply for the process of telling the police the reposession by the co-signer isn't the case of a stolen car!

    In short, the co-signer said "If the car payments don't come from so and so - I will take responsibility."

    Like Jay said, should have had a written agreement with her about what happens when the loan is not paid in a timely manner and a copy of the key.

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    I was watching Suse Ormon the other night and she had this adult daughter who said her mother should give her MORE MONEY!

    Now, what I am gonna say is probably really un-PC, especially on this site, but I have encountered this incredible sense of entitlement on part of women and speaking to other men my age (30+) they also are taking notice how women have these unusual expectations about what they will be given these days. (Especially the divorced ones!)

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    Default Re: Do co-signers have any "rights"?

    Holy smokes! This story sounds alot like what happened to my husband a few years before we met. He co-signed for a car for this girl who promptly dumped him after she got the car. Then she stopped paying on the car. I think it was a straight up con job.

    To this day is on his credit report and we get hassled pretty regularly by collection agents. He refuses to pay for that girls car. We tried to find her but she has disappeared with the car.

    One time a collections guy came knocking on our door and accused me of being that woman. He threatened me and made me feel like he was going to hurt me. It was very Soprano-ish! After I managed to get the door closed, which wasn't easy since he kept sticking his foot in it when I tried to close it, I called the police. when the cops got there they ran the man off our property. He was actually sitting in his car as if waiting for me to come out of the house or something.

    The whole thing has been just awful. I recommend that no one ever co-sign for anything!

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    Default Re: Do co-signers have any "rights"?

    Quote Originally Posted by Pan Dah
    Not necessarily. This might be another thing that varies from state to state, but last time I financed a car here in New York, my name was on the title and the bank was listed down below as a Lienholder. This means, in effect, I own the car, but the title won't be transferred by the state without a letter releasing the lien.

    You are right - I stand corrected.

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    Default Re: Do co-signers have any "rights"?

    Most of the northeast states list the primary borrower on the title with the bank as leinholder. Co-signer's rights are not directly stated, and must be enforced through the bank taking action as leinholder. Thus if this car loan is not considered to officially be in default by the bank, any direct action on the part of the co-signer to 'privately repossess' the car could be construed as auto theft.

    There's also a less painless possibility here. I would recommend that, before the loan officially goes into default, that the co-signer sit down with the bank's loan officer and work out a mutually agreed course of action that will minimize the pain and paperwork for everyone involved. But ultimately, if the primary borrower isn't willing to voluntarily give up the car, somebody is going to have to go through the legal motions of official reposession. If the co-signer can convince the bank to do this prior to the loan officially going into default, it will save a lot of credit damage.

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    Featured Member Vamp's Avatar
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    Default Re: Do co-signers have any "rights"?

    The bank wont get involved in the reposessing of a car unless they are doing it for themselves. Banks are more scared of the law than citzens are. Right now under the law both parties have a legal right to the car no matter who has made the payments on it.

    The bank might work out a payment agreement with the co-signer. Getting the car back or sold will need to be done in court.

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    Default Re: Do co-signers have any "rights"?

    Quote Originally Posted by Melonie
    any direct action on the part of the co-signer to 'privately repossess' the car could be construed as auto theft.
    This was the case in our State as well. There seemed to be zero options to protect my husband's credit in regards to the car loan he co-signed. In the end we just had to suck it up and deal with the damage on his credit report.

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    Default Re: Do co-signers have any "rights"?

    umm...attorney time! Find out what your REAL rights are in YOUR state

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    Default Re: Do co-signers have any "rights"?

    I'm not sure that what I'm about to describe is entirely legal, but it did happen.

    Boy was dating/living with girl. Boy's mother co-signed on girl's car loan. Boy and girl broke up. Girl didn't pay on car. Boy's father called the local wrecker service to repo the girl's car... even though technically, he and his wife were responsible for paying. This isn't all completely played out, but apparently there are ways to punish the non-paying party (not the co-signer). I dunno, that probably is just confusing.
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    Default Re: Do co-signers have any "rights"?

    ^^^ this would be 100% legal if the boy's father had first gone to the bank and paid off the car loan in its entirety, and thus had the car's title re-issued in his name.

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    madmaxine
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    Default Re: Do co-signers have any "rights"?

    At the moment, a "person I know" is going to have his car repo-ed due to some problems w/ papers (the dealer's fault, actually.) So the dealer has the law on hs side & the car will be repossessed as soon as this person gets pulled over by a cop.

    The point? Get the law on your side somehow, even if it's a bit of fudging. Maybe this chick has unpaid tickets....

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    Default Re: Do co-signers have any "rights"?

    Quote Originally Posted by LoveSexMoney
    While we all know that boy is ultimately responsible for the timely payments of the loan, is he just completely fucked over or is there any sort of recourse available to him?
    As an "accomodation maker" or surety, should he be called upon to pay he'll become subrogated to the rights of the lender under the agreement - but, beyond that, would suggest he be very careful not to overstep his bounds by engaging in some form of "self-help" (i.e., repo, etc.) unless and until has either been sanctioned by court or, at very least, advised re rights, responsibilities, etc. by counsel. As a general rule, the law tends to disfavor self-help remedies (for obvious reasons) and, despite resulting unfairness in certain situations (such as instant case), will often severely punish those who fail to follow the rules and requirements specified for any attempt at resorting to same.
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    Default Re: Do co-signers have any "rights"?

    Quote Originally Posted by LoveSexMoney
    well just to update he brought a copy of the registration to the dealership yesterday and had a duplicate key made. He also spoke to the chief of police in our area and was told that the police would stay out of the "repo" matter since the car is in his name too. Now it's just a matter of FINDING her since nobody knows where she stays. We know where she goes to school but suspect she may be catching a ride with another student since the car never seems to be there.

    and the drama continues...

    She probably can't afford to put gas in it

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    Default Re: Do co-signers have any "rights"?

    As stated by others above, co sign is merely another word for "guarantee." The rights of a guarantor are those he or she writes in the guarantee agreement, sometimes called the indemnity agreement. This governs how the guarantee works. Your rights as a business decision, are who you are doing this favor for, and why are you guaranteeing anothers loan? If you can not clearly answer this questions as guarantor, don't co sign the loan.
    When I look back on it, my parents helped me get a junk first car, and the other help was putting me and the car on their auto policy and then having me pay the increase. This is still a break from going out and trying to get a age 16 to 19 single auto policy by yourself.
    Additional rights a guarantor may wish to consider, is having dupliate billing coupons and notices from the bank sent to him also (as a legal interested party). This notifies the guarantor directly of non payment problems almost immediately before they are allowed to fester, accrue additional penalty interest, and possible have the car reposessed. Non payments of insurance premium warning notices can also be sent to the guarantor if the deal is properly drawn up. Additional protections in favor of the guarantor would be
    as co owner on the auto title... (this might be hard to get as the guarantee only "springs" into life if something does wrong on payment from the car owner to the bank.)

    A collateral agreement as a side letter that immeidately causes ownershp in the car if the guarantee springs up would block a sale of the car title.

    The more protections written in and a simple co signature becomes something like a prenuptial agreement and can cause bad feelings.

    Go back to the first question. Why are you guaranteeing somebodies loan and can you really trust them? If the shy is squishy or unclear, and the the trust answer is no... don't sign as co signer.

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    Default Re: Do co-signers have any "rights"?

    Depending on the state you live in, if the deal was kind of an informal co signature, boyfriend may not be on the car title. The deal is girlfriend is owner, with a lien on the title to the financial institution. A condition of doing the guarantee (co signature) at the time the deal was done, could of been to be included on the title. From the facts presented, it appears boyfriend is not listed on the title as owner.

    A reason to not be on the title, is say the loan was conservative...50 % loan to value on a Honda hybrid. This car example tends to hold its resale value better than other cars.

    If girlfirend pays the loan, (say it was a three year loan) the loan is amortized slightly with each payment, and there is more and more equity, and less and less loan with each payment on the deal. This is an argument from girlfriend to not put boy friend on title..

    The guarantee "springs" up only if something goes wrong.

    From a macro economic standpoint, the co signature process allows entitites (or people)
    to purchase and possess things that they would otherwise be disqualified from owning.

    While in our go go find a way to allow everybody to have a new car and a big house through creative finance, this super salesman make a deal philosophy was not always around, and sometimes disappears during rough economic or financial times.

    Would a junker car fixer upper have had lower payments, lower insurance, and enabled girlfriend to keep the asset and still have transportation and not lose the new car?

    I was forced to learn about cars and do work myself on my first car to keep it running. This incoluded me doing tuneups, me doing break pads, me replacing hoses, and me doing the timing on the engine. I also patched tires and admired cars that had new tires that were'nt patched.

    If I worked on the car, it was reliable. It was not cool, did not win me many dates for being cool, but was never repossessed either.

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