What do I do if I am a co-singer on my brother’s vehicle and he is late on payments?

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What do I do if I am a co-singer on my brother’s vehicle and he is late on payments?

I co-signed on a vehicle for my brother and his wife who happen to move out of state about a month ago. They have fallen behind in payments and a repo place is knocking at my door trying to find them. What can I do? How does this affect me and my credit? Can I take the truck?

Asked on July 27, 2011 Minnesota

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

In reference to E.M.'s answer--note that you can't simply take the truck. Cosigning a loan does not itself give you an ownership interest in the vehicle. As E.M. notes, you can make the payments to protect your own credit rating and then bring a legal action, if necessary, to seek reimbursement from your brother and his wife. Similarly, if you make the payments on the vehicle, you may be able to bring a legal action to seek possession of it on an equitable theory, because you made the payments. However, you can't simply take the car, if it is titled to your brother and/or his wife, without a court order transferring it to you; the fact that you co-signed a loan does not make you an owner without more. This is why co-signing is a bad idea; you get the downside--the obligation to pay--without the upside--you don't actually own anything.

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

If you co-signed on your brother's loan for a vehicle for him and his wife, you too are responsible under the loan's terms to make payments on it. If your brother and his wife are not making payments on the vehicle, you need to cure all late payments and continue to make payments on it when they do not.

If you do not step up, your credit rating will be damaged due to late and no payments. The vehicle could very well be repossessed, sold at auction after notice is given to you, your brother and sister, and any deficiency resulting would be expected to be paid by you, your brother and sister.

You can take the truck and continue to make payments on it. Ultimately, if you make payments on the vehicle, your brother and his wife are obligated to reimburse you for the payments and any judgment for a deficiency on the sale that you may have to pay.


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