What to do if I co-signed a loan with an individual for a motorcycle and she defaulted on the loan?

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What to do if I co-signed a loan with an individual for a motorcycle and she defaulted on the loan?

I was never contacted by the financial institution explaining that the account was past due. Now I am being contacted by a collection agency and being harassed about the remaining balance. I have never received anything in writing from the collection agency, just nasty phone calls. What legal action do you suggest?

Asked on October 23, 2012 under Bankruptcy Law, Ohio

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

If you cosigned the loan, you are responsible for it: in the event of the other signor's default, the lender or its collection agency can look to you for payment, and if you do not pay it, it can sue you and your credit rating/history will be damaged. You do not have any grounds to not pay, unless you can invalidate the entire transaction, such as for fraud. Failing that, to avoid credit damage and/or litigation, you will need to pay the loan. You in turn can sue the other signor to recover the money from him or her that he or she should have paid towards the loan.


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