Cosigner delinquent, repo primary's car?

[QC]

My wife and I know a family that is going through some very tough financial times. They were riding high and then the Real Estate crash has thrown their AC business into the toilet . . . Anyway, their son (20 YO) has a car that the mom Co-signed on. She is delinquent with the same Credit Union on a separate and un-related loan. They repo'd his car last night, and when they called this morning to see what they have to do to get it back they said that she had to get current on the other loan . . . Although it would be nice if they were not delinquent on anything, what I have described is the case. Is that legal? Please no admonishments here for their irresponsibility. I am just asking a single question: is what occurred legal?​

 

[Limited-Time]

Re: Cosigner delinquent, repo primary's car?

Let me get this right......................shes delinquent, he's current, and they repossessed his car??

 

[QC]

Re: Cosigner delinquent, repo primary's car?

I don't think he's current, but I think only one payment late . . . but yeah, from what I have been told, that's the story. They said she has to pay up on her loan and then they can get the car back . . .

 

[JB]

Re: Cosigner delinquent, repo primary's car?

Don't have any idea whether it is legal or not, but it sure as heck isn't justice.

I just now, after 8 years, have gotten a loan that I cosigned off my credit report. The primary is chronically late making the payments, but does eventually make them 30 to 59 days late.

 

[thefairlaneman]

Re: Cosigner delinquent, repo primary's car?

Im afraid its legal. The fine print in the co-signer agreement will show it. Sucks for sure.

 

[joed]

Re: Cosigner delinquent, repo primary's car?

If he's one payment late that could be the reason in combination with her being delinquent on other loans.. If he was current then it would seem to be illegal to me but I don't know for sure.

 

[rwise]

Re: Cosigner delinquent, repo primary's car?

I would file a theft report with the local LEO's

 

[Bob_VT]

Re: Cosigner delinquent, repo primary's car?

Im afraid its legal. The fine print in the co-signer agreement will show it. Sucks for sure.

Yes it is legal...... +1

What was the property related to the other loan? Possibly the car is the only value they need...... or the "other loan" may not be real property.

 

[QC]

Re: Cosigner delinquent, repo primary's car?

Other loan was "personal" i.e no collateral . . .

 

[MrBigStuff]

Re: Cosigner delinquent, repo primary's car?

No collateral? Never heard of that before. No lending institution is going to fork over money without some form of collateral. I've taken out personal loans in the past and they always required some form of collateral equal or greater than the loan amount. Sounds more like a loan shark than a legal lending institution...

 

[Limited-Time]

Re: Cosigner delinquent, repo primary's car?

No collateral? Never heard of that before. No lending institution is going to fork over money without some form of collateral. I've taken out personal loans in the past and they always required some form of collateral equal or greater than the loan amount. Sounds more like a loan shark than a legal lending institution...

A personal loan is just that............no collateral required..........they are granted on the strength of your current debt to income ratio and your credit rating...............I've never had an asset tied to them.

 

[QC]

Re: Cosigner delinquent, repo primary's car?

Yeah, what LT said, and what do you think a credit card is? Effectively a cash advance is a personal loan, and it's not like they can get you to puke up the dinner you charged as collateral either . . .

 

[thefairlaneman]

Re: Cosigner delinquent, repo primary's car?

In this day and time the ONE thing a young person does not want to do (other than get HIV or go to jail) is to ruin his credit. Just think a boy meets the perfect girl and they want to get married and start a family and have a home.INPOSSIBLE if either one has bad credit. I have told my son to make sure and run a credit check on any girl he thinks he may get serious about. When I started dating my to be wife I checked on her debts and determined she was credit worthy . She had just bought a new car and I knew that she couldnt have had bad credit in or to do that. People trying to get married AND STAY MARRIED dont stand a chance if they ruin their credit.

 

[rogerwa]

Re: Cosigner delinquent, repo primary's car?

From the description, the bank repoed the car, which was the collateral on the cosigned loan, for her being late on an unsecured loan or LOC. In my view, they do not have the right to repo the car as the loan was not secured by it. This is of course if there was no court order allowing it.

Additionally, they had no lien on the car and it would have been a secondary lien, which would require the primary lien to be satisfied first before they could take it.

 

[Kenneth Brown]

Re: Cosigner delinquent, repo primary's car?

Credit uions are under different rules than banks. I still don't know the answer (although I suspect its not legal) but was offering info. Be sure to look for CU info when checking this out.

 

[jay_merrill]

Re: Cosigner delinquent, repo primary's car?

I'm not surprised at this at all. When you co-sign a loan, you are a "co-borrower." If you end up in arrears on another loan with the same institution, they are going to go after any asset they can. Since the car is collateral on a loan that the mom made, just as much as the son did, the bank is going to take it.

To me, the bigger problem is in getting into a co-signing relationship in the first place. It just seems like they very often become a mess. I established credit by buying a motorcycle while I was in the service, followed by paying off my college loans in half the require time. The Coast Guard Credit Union was fine about lending an 18 year old 1,500 bucks because they knew I would have a job for the remainder of the loan term. Same with the school loans - they were Federally secured, so the bank wasn't too nervous about them either.

As for co-signing for others, I just don't do it. As far as I am concerned, its a great way to ruin a relationship. Its also a bad deal for the co-signer because, in the eyes of the lending institutions, it raises your debt load and therefore, negatively affects your ability to take on more debt if you need to.

 

[Tail_Gunner]

Re: Cosigner delinquent, repo primary's car?

Other loan was "personal" i.e no collateral . . .

I believe your reasoning is sound QC. I very much doubt that any verbage would be allowed in a retail finance contract effecting the terms of another contract.....

However look at both of the contract's default clause's on both contract's........In essence it may state's that the loan can be recalled at anytime and basically for no reason....A fail safe built in to protect the lender.....In this case the Bowerer has 2 loans with the same institution..allowing them to recall the second good loan....

If that verbage does not exist....and even if it does there are out on a bit of limb here...call your attourney general consumer division, but i suspect they are overwelmed with the housing issue...Or if you know of any decent contractual attourney's they would be able to read the defualt's clause and tell you in short order where you stand.

Umm this is strickly a opinion your milage may vary...

(legaleze BS)


http://ag.ca.gov/consumers/

 

[QC]

Re: Cosigner delinquent, repo primary's car?

No updates yet. Everybody fairly resigned to believing that it is legal and they are trying to come up with some cash or walk . . . Sucks, hate seeing it, and I hate seeing the kid learning this kinda lesson this way . . .

 

[MrBigStuff]

Re: Cosigner delinquent, repo primary's car?

Yeah, what LT said, and what do you think a credit card is? Effectively a cash advance is a personal loan, and it's not like they can get you to puke up the dinner you charged as collateral either . . .

Based on that, I can see we're coming from two, completely different perspectives on level of funding.

 

[bassman284]

Re: Cosigner delinquent, repo primary's car?

Effectively, the cosigner IS the primary. They require a cosigner when they don't the the original borrower is good for it. If the son had stayed current, they would have no reason to repo the car. Delinquent is delinquent. They know the situation and have decided they are not going to get their money.