What to do if I co-signed on a loan and the primary borrower defauted?

Get Legal Help Today

 Secured with SHA-256 Encryption

What to do if I co-signed on a loan and the primary borrower defauted?

I co-signed on a loan with my sister 6 years ago. I am now married and have asked her repeatedly to remove me from the loan and nothing ever came from this. Now 10 months later my wife and I are trying to get pre-qualified for a home loan of ourselves and come to find out she hasn’t been making payments for 8 months and now is considering foreclosure. Can I sue her for defaulting on the loan and for damages for my credit?

Asked on January 24, 2012 under Real Estate Law, Alabama

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

1) Can you sue your sister for not making her payments? Yes, you can, and you should speak with an attorney about doing this. You should be able to recover the payments she should have made.

2) Can you sue her for damage done to your credit rating? Probably not. That damage is very difficult to quantify, which makes it almost impossible to recover compensation for. You can discuss it with your lawyer and possibly add it to the complaint, but it's doubtful you will recover for this.

3) Bear in mind that you are liable for the debt you cosigned--that means that if she cannot or will not pay, the lender can come after you for the money owed. This situation will not resolve itself; you need to discuss your options with the attorney--you may need to try to negotiate something with the lender, or you may need to even consider bankruptcy. In the future, *never* cosign for anyone--your incur all the downside risk of their default without getting any of the upside benefit of the loan.


IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

Get Legal Help Today

Find the right lawyer for your legal issue.

 Secured with SHA-256 Encryption