What rights does one co-signer have against another co-signer if they allow a loan to go into default?
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What rights does one co-signer have against another co-signer if they allow a loan to go into default?
Over 5 years ago, I co-signed for a loan on a car with my now ex-boyfriend. When we broke up, he took the car and agreed to make the payments. He missed a few payments and eventually surrendered the car to the bank for repossession. He failed to notify me of these events. I received the bank’s notification of intent to sell and I’m interested in paying off the loan and taking the car to avoid further credit injuries. The car does not run but is in good condition aside from that. Can I sue for the repairs if I pay to fix? Can I sue for the credit issues that have occurred with this agreement?
Asked on August 15, 2011 Missouri
Answers:
FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney
Answered 12 years ago | Contributor
The laws in all of this country's states are that implied in all agreements where one is a co-signer for the primary borrower, the primary borrower agrees to defend, hold harmless and indemnify the co-signer from any fall out if the primary borrower fails to honor the agreement which was the basis for getting the co-signer involved.
In your situation, you co-signed on a car loan for your former boyfriend where the car was his. This vehicle has now been repossessed and you are facing a situation of paying off the balance of the loan and taking possession of the vehicle to protect your credit versus any deficiency judgment if the car is auctioned off.
If you pay off the balance of the car's loan, take possession of it and sell it at a loss, your former boyfriend is liable to you for this amount and accrued interest. Proving credit damage in general is a difficult thing to establish but the actual loss that you may incur in this car transaction is not.
Good luck.
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