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Thread: co-signing a loan and how it affect credit

  1. Taking things one day at a time
    kansassunshine's Avatar
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    #1

    co-signing a loan and how it affect credit

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    A few years ago my DF co-signed a loan for his youngest sister to buy a car. Sister got married a year or two later and moved to Hawaii and couldn't take the car. Their mother took the car with the understanding (assumable verbal) she would continue to make payment on the car until it was paid off.

    Today DF finds out his mother had not been making payments and the bank reposesed the car. He's deployed to Iraq and had to wire the money to his older sister to pay off the car. So now they have the car and are going to sell it in hope of getting back some of the money.

    He's freaking out because his mother's not making payments has probably totally screwed up both his credit and his sister credit. Is there anything they can do? IMO the bank should have contacted one of them when payments on the loan were not being made. I'm not sure if the bank did or not. I know they are both most concerned about how this will affect their credit. Any thoughts or suggestion as to what to do next?
  2. The Decider
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    #2
    Once it is paid off, he can write the credit bureaus to have them remove it from his credit report if it is in collections. If it is listed as repossessed, I'm not sure which route he could take. Have him contact base legal and see if he has any recourse.

    You can be sure the bank made every attempt at contacting both his sister and him before repossessing the vehicle. Banks want your money. They don't want your stuff.
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  3. Banned
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    #3
    the thing is he can take his mom to small claims court to try to collect for the non payments - but if he and his sister were the only names on the loan he and his sister were ultimately responsible for the car.

    the best thing to do- is just sell the car and get out of it.

    I signed for my DD 2 yrs ago- she made 6 payments in 3 yrs, I was forced to pay the rest. in june I took the car and sold it, I had to pay 800 dollars to get out of it ( thankfully we were not upside down I just sold it at a good price) , there is no use in trying to sue her for the payments and the losses I incured.
    I will never co-sign a car for anyone else that is for sure!
  4. Regular Member
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    #4
    Wow, this is another reminder NOT to co-sign! By paying off the car, he resolved the issue--a very good thing! Your husband should check his credit report at www.annualcreditreport.com (the government mandated site that allows you to check your report for free) about 30 days after car was paid off to ensure it is being reported properly. He can pay about $10 more to see his credit score...and what type of damage was done. Beyond that, only time and continuing to pay bills and use credit responsibly will bump that score back up.

    A couple of years ago, I co-signed an apartment lease for my daughter and ended up paying the last 3 months of the lease and damages to avoid the ding to my credit when she moved out on a whim and couldn't meet her obligations...but they definitely called me!
    J.J. Montanaro is a CERTIFIED FINANCIAL PLANNER practicioner with USAA Financial Planning Services one of the USAA family of companies.

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