Co-signing a loan

Shane T Anderson

As a co-signer, you are liable for the loan. If the vehicle is repossessed and sold for less than the loan amount, then the lender can come after you for the "deficiency" amount. The deficiency is the difference between what you owe and what the automobile was sold for. You should contact the lender to find out the status of your friend's account.You should also check your credit report to make sure that a loan deficiency has not been reported to one of the national credit reporting agencies (e.g., Equifax, Experian, TransUnion).

Benjamin Kirke Sanchez

In addition to Shane's answer, I would add that you should look at the contract regarding your rights and duties as co-signor. Sometimes, under a contract, the co-signor has to be given notice before such action is taken. If you were entitled to notice (so that you could make the payments instead of suffering any negative credit activity) and not given notice, then you may not be liable for any amount due.

Brian J. Passante

The exact legal repercussions and your rights may vary somewhat from state to state. In Georgia, a co-signer is generally a primary obligor on the debt. Absent written provisions altering the this general arrangement, this means co-signer are liable just like the primary borrower to make timely payments and respond to any defaults or other breaches of the loan documents. Even if you are a guarantor or surety and not a primary guarantor, you are likely liable for the entire amount that will be owed by your friend, the borrower.

You should definitely investigate further and seek the counsel of an attorney if the debt or obligation is significant.

You should probably inquire from the attorney you hire about at least the following: what notice obligations the creditor owed or owes you; Whether you can cure the default before the sale of the collateral (car); what notices and rights you may have to redeem the car by payment of the full remaining debt (or any lesser cure if available); what notices you are entitled to about the assessment of a deficiency remaining After the car/collateral is sold and the sale proceeds applied to the debt; and, whether the creditor may have the right to sell the car at private sale instead of public auction.

You may also wish to request the free copies of your credit reports from the Credit Reporting Companies (under the FCRA a federal law), or any rights under your State’s law to obtain your credit report. Then you will know whether there are any options available to you to correct and inaccurate data reported by the creditor, depending on the results of your discussions with any Attorney you might retain.

Best of luck in addressing these issues. You have made a good first step in recognizing you should take action and educate yourself about your options.

Note: This Answer and any information contained in this answer is not intended to be treated as legal advice; And, this posting does not create an attorney-client relationship or privilege of any kind.