What happens when a car is repossessed and the loan has been guaranteed?

UPDATED: Jun 17, 2011

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What happens when a car is repossessed and the loan has been guaranteed?

Our Church allowed a member to finance an auto loan in the name of our Church. The company needed that person to sign as a guarantor of the loan. The vehicle was repossessed a year ago and the person who signed as guarantor of the loan is deceased. Can that company now come to us (the church) for the balance of the loan?

Asked on June 17, 2011 under Bankruptcy Law, Alabama


M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

Okay so let me understand: the loan was titled and financed in Church XYZ's name and the member co-signed the loan, although in reality the car was not for the Church use but for the use of the member, correct?  And the member defaulted (died or just did not pay the loan) and the car was repossessed.  If the Church was on the title and the loan then yes, the lender can come after the Church for repayment.  I would try and find out what happened after the repossession.  Was the vehicle sold at auction and was there a deficiency (money left over on the loan after the vehcile was sold at auction)?  And I would see if there was any judgement taken for the deficiency.  Good luck. 

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