How do I collect money from a family member?

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How do I collect money from a family member?

My husband co-signed a car loan for his niece; he was the primary on the loan. She defaulted and he became responsible. We took out another loan to protect our credit and paid off the car with the promise she would pay us back. Meanwhile she sold the car, since the title was in her name, and gave us the money to put toward the loan. We have not received any other money since then. We have approached her but there is always an excuse why she can’t pay anything. Meanwhile we sit back and watch her spend money that could be put toward the loan. Is there anything we can do?

Asked on May 9, 2011 under Bankruptcy Law, Pennsylvania

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

To collect money from the neice, you would have to sue her: there is no other way to enforce her obligation to pay. You should be able to sue based on being cosignor of the original loan or based on her subsequent promise to repay the other loan (which could be enforced potentially as an oral agreement or under the thheory of promisorry estoppel). The question is whether it is worthwhile suing her; e.g. does she have the money to pay? If not, then even if you win, you lose--you spent the money on a lawsuit, but did not recover anything. That said, even if she doesn't or won't pay after you sue her and win, you may be able to garnish wages or bank account, force a sale of some of her possessions, or put a lien on any real property she owns.


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