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Ok-my boyfriend co-signed a car loan for a friend and this friend defaulted on making payments. He volutarily surrendered the car and they auctioned it off. Now, a collection company is calling my boyfriend wanting the remainder amount that is left. Can they do that even after the car has been repossessed? They told him he has until Friday or their client would take further action. He can’t pay what they are saying he has to pay…he told them what he could pay a month but they won’t accept it. I want to help him with this…any information you can provide would be greatly appreciated…

8 Comments »

1. 

   Yes, they can definately come after you for the remaining amount. He should get with the friend and have the friend help pay off the remaining balance, a small price to pay after ruining your boyfriend’s credit!!

   Comment by BeThAnY — January 12, 2011 @ 9:03 pm

2. 

   The creditor can come after you for the deficiency. They will try a collection agency first in an attempt to collect. If you do not make payment arrangements or the collection agency makes no progress with you they will inform the creditor and the creditor may or may not make other attempts to collect. They could write it off as a bad debt, or try further collection attempts, or get an attorney to come after you for a potential judgement. All of that will not happen overnight and it’ll give you time to prepare. Seek legal counsel at some point. Some attorneys might not charge for an initial consultation. If it comes to legal measures down the road your attorney and their attorney could even reach a settlement. It happens all the time. Prepare your self though because if it get’s to the point where a suit is filed, it’ll be another black mark on your credit report. Don’t be surprised though that should you have an attorney arranged payment schedule down the road, that could also find its way to your credit report.

   Comment by tampabaycreditdoctor — January 12, 2011 @ 9:03 pm

3. 

   Your boyfriend and his friend are jointly and severly liable.

   The finance company has already figured out the other guy is a deadbeat so they will sue your boyfriend to recover the money they have lost.

   Options? Pay it.

   His credit is already pretty shot by this but he may be able to go to his bank, explain the situation and get a loan to pay off the finance company.

   Or he needs to start sending them as much as he can every week. That way when they sue, the judge will see he is making an effort and hopefully treat him fairly when assessing garnishments.

   If in his shoes I would do whatever I could do to get a loan and get it paid. Or take a second job and start sending checks.

   Then I would sue my "friend" for the money I am out. What a loser and definitely not a friend.

   Just proves the saying, "no good deed goes unpunished".

   Comment by Gem — January 12, 2011 @ 9:03 pm

4. 

   I’m sorry to hear about your boyfriends dilema. Unfortunately, this is all that will happen:

   They are going to do exactly what you explained in your details, if not worse. They will report lateness to the credit bureau affecting your boyfriend’s credit. They will then send the account (remaining balance) to collections and they will report to the credit bureau affecting your boyfriend’s credit further.

   Your boyfriend will have a repossession in his credit history indiscriminate of the fact that he was merely a co-signer. He might as well had taken the car himself and made the payments from the start… that’s how sorry this situation is.

   The underlying fact of the matter is that your boyfriend’s friend owes him money, but that issue will not be recognized in a court of law (if you wanted to go that route) being that they both owe the finance company of the vehicle jointly.

   Next time your boyfriend will need to construct a separate contract between him and his friend (or ex-friend) tieing a piece of property to it in case of default on the next co-sign. Or that friend will need to pay your boyfriend a co-signing fee that’ll match a downpayment.

   God bless.

   Comment by Pilgrim Progressing — January 12, 2011 @ 9:03 pm

5. 

   Yes. They’re entitled to the "benefit of the bargain" — the contracted amount.

   This is why people should never cosign for anyone ever.

   Comment by Bill — January 12, 2011 @ 9:03 pm

6. 

   Yes, your boyfriend is responsible for the loan balance minus what the car brought at auction.

   Comment by linkin — January 12, 2011 @ 9:03 pm

7. 

   Just change your telephone number and the whole problem will go away.

   Comment by austin4fishing — January 12, 2011 @ 9:03 pm

8. 

   Yes, the repo company takes it to auction on behalf of the lender. The vehicle is sold and whatever money they make goes to pay the repo company, the lender for their collection action against the borrower, and the rest to the balance of the debt. If the auction does not bring in enough money to pay everything off, the borrower is liable for the balance.

   To save his credit, he should make payment arrangements with the collection company and stick to them. And he should seriously kick this friend to the curb! What a deadbeat to do that to a friend. Sorry, and good luck!

   Comment by Tam — January 12, 2011 @ 9:03 pm

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