What is my obligation as the co-signer of a defaulted car loan?
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What is my obligation as the co-signer of a defaulted car loan?
Co-signed for my brother on a car loan. Failed on his obligations and the vehicle has been repossessed. Was auctioned and now I am being sued for the remaining balance $3,079.63. Can the debt collectors freeze my bank accounts or take the only vehicle that I own and is under my name? Is there such a document that my brother can sign, agreeing to relieve me of this collection?How can I clean up my credit report?
Asked on October 20, 2011 under Bankruptcy Law, Texas
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 13 years ago | Contributor
1) As a cosignor, you are legally as obligated for the debt as your brother.
2) If you are sued for the debt and lose and then do not pay it, the winning judgment creditor (the one who sued you and won) can potentially garnish your bank account, putting a lien on property, or seeking to have some of your assets (liek a car) sold to pay the debt.
3) You cannot change the existing to date credit history (e.g. that there was a default on a loan you co-signed, or a vehicle repossesion); all you can do is stop additional negative information, by paying the debt.
4) Your brother cannot relieve you of your obligations to the lender or bank; only the lender or bank could voluntarily let you out, and there's no reason why they should (it reduces their chance of getting paid). Yourr brother can certainly agree to reimburse or indemnify you for the costs, and/or you could sue him for his share if he won't voluntarily pay.
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