Can a credit union hold me accountable as a co-signer on a modified loan that I had no part in negotiating?

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Can a credit union hold me accountable as a co-signer on a modified loan that I had no part in negotiating?

I divorced 5 years ago and the decree ordered my ex-wife to either sell her car if she couldn’t afford or be solely responsible if she elected to keep. I am a co-signer to this car and otherwise loan. Then, 4 years ago my ex-wife requested the terms of the loan be extended an additional 36 months in order to lower her payments. Although the payments were lowered, my ex still experiences slow pays to which my credit union will either deactivate my debit card, garnish funds directly from my account, and/or refuse to conduct further business until I address delinquency.

Asked on January 29, 2013 under Bankruptcy Law, Pennsylvania

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

Under the laws of all states in this country, if the loan that you co-signed for was later modified without your consent and knowledge, you are no longer liable in any way for its terms. The reason is that you did not agree to them nor sign the loan modifcation agreement.

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

As a co-signor, if you did not consent to the modification, the original loan terms should still be in force. That is because any type of contract or agreement may only be modified by the consent of ALL parties; without unanimous consent, the modification fails. However, that does not relieve you of your obligations under the loan, but rather keeps in place the loan's original terms, which may not help you in this instance (since if your ex-wife is failing to make payments when the payments were lowered, she presumably would be failing even worse under the original terms of the loan).


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