Looking for help - advice on a financial settlement

[Menotti80]

A close friend of mine (Jennie) is looking for any advice that will help her out.

 

Background:

About 5 years ago, Jennie had a boyfiend that she lived with. Jennie's had basically no credit at the time and needed a car, so her parents helped her out with a down payment on a brand new car, that was in her name AND her boyfriends name. Her parents also agreed to help with the monthly payments, while Jennie's boyfriend was in charge of insuring the vehicle.

 

Within months of owning the vehicle, Jennie's boyfriend totaled the car. They then found out he didn't insure the vehicle. Shortly after this incident, the two of them broke up and are not on speaking terms. Nobody has made a payment on this car since.

 

Present:

Somewhere in the neighborhood of $12k is still owed on this car, which still has Jennie's name on it as a co-owner. She has taken no action besides trying to get her name removed from the responsibility of paying this debt because the ex-boyfriend didn't insure the vehicle and therefore is at fault. And therefore she has horrible/no credit. She is looking to start building credit so she can buy her own car and not use hand-me downs and old used cars, as well as buying a house down the road.

 

She has contacted a lawyer that is a friend of the family. The lawyer suggested that she drafts a letter to the collection agency and to name a price she would be willing to pay to get her named cleared once and for all so that only the ex-boyfriend would be responsible.

 

 

Her question is: (Since she doesn't have much money laying around) What would be a reasonable offer to make to this agency to clear her name? Since she still believes she should not owe a penny because it was not her fault there was no insurance, she doesn't want to offer much. But she also doesn't want to have her offer get thrown back in her face because it's such a small % of the amount owed.

 

 

Any advice on what she should do or how much to offer? Thanks in advance, because I have no clue on stuff like this.

[TURBO]

Wow, a lot of mistakes made here from the very beginning.

 

Why on earth would her parents put her name AND her boyfriend's name on the title/loan? That, from the very beginning was a recipe for disaster.

 

If he was supposed to get the car insured, was he to do it for both of them? Why did she not check to make sure he did it, afterall, she was driving the car too, did she just assume he had done it? She should have been concerned when he didn't give her an insurance card with her name on it.

 

Does the lawyer think that will actually work? That really sounds like wishful thinking on his part. I just can't see anyway she can remove herself from this responsibility.

 

Young people do stupid things like this all the time, just a complete lack of common sense and responsibility, however, her parents may be even more clueless for doing what they did.

 

I'm no lawyer, but I just really doubt this will work out for her in the end.

[MJLiverock]

I doubt the lending agency and by extension the credit collection agency will care what she believes or that she doesn't want to take the hit or the blame for the non payment if her name is on the loan and she signed it. The collection agency most likely can't get her name off of the loan as only the lending agency or owner of the note could do that. Most times the collection agency does not take ownership of the note, they just work on getting a percentage of a recovered amount and can't change the note by dropping a person from it.

 

The lending agency may be convinced to remove her name from the note in exchange for payment, they will likely ask for all the money owed, as that is their legal amount owed if she signed on as a borrower and the note doesn't specifically state a limit to her obligation. (Sometimes people will sign on what is called a limited personal guarantee stating their max obligation in multiple borrower scenarios) Typically though most joint consumer credit is the amount is owed by all or just one, whomever the lender can get to pay. The lender would expect any dispute between co borrowers to be settled between them, i.e. she can take her ex boyfriend to court over the amount and make her case there but as far as the lender is concerned she is liable for the full amount just as much as he is.

 

Anytime you sign on as a joint borrower you are responsible for the full amount of the loan. The lender doesn't care if and the co borrower have an arrangement of 75/25, or 50/50 or 100/0 or who is supposed to set up insurance, in their eyes it is each persons responsibility. This is why you never, never, jointly borrow money or sign a lease unless you can be sure the other borrower is good for the money, or you don't mind paying the whole thing yourself or you have written limits on how much of the total you are responsible for.

 

I worked as a business credit officer and risk manager for bank for a few years right out of college and lost track of how many times I heard stories like this. Parents co signing for kids loans and then being shocked when the bank told them they were just as responsible for the whole amount as their kid. Boyfriends/girlfriends were always the same, one just thought they would only be called for half the money rather the whole thing for cars, boats, motorcycles, homes, furniture, etc.

 

The key will be working with the note holder and not the collection agency to get her name off the debt. I know that when I was reviewing stuff like this for the bank I wouldn't let her name off the note unless she paid a substantial amount of the money or got the ex to also agree to kick in enough to just retire the whole thing rather than just drop one off the note.

 

Also remember any amount of debt that is forgiven for her may also need to be claimed on her income taxes as a forgiven debt and may increase her tax bill a bit. Check with an accountant or research it further at tax time next year.

[nate82]

A close friend of mine (Jennie) is looking for any advice that will help her out.

 

Background:

About 5 years ago, Jennie had a boyfiend that she lived with. Jennie's had basically no credit at the time and needed a car, so her parents helped her out with a down payment on a brand new car, that was in her name AND her boyfriends name. Her parents also agreed to help with the monthly payments, while Jennie's boyfriend was in charge of insuring the vehicle.

 

Within months of owning the vehicle, Jennie's boyfriend totaled the car. They then found out he didn't insure the vehicle. Shortly after this incident, the two of them broke up and are not on speaking terms. Nobody has made a payment on this car since.

 

Present:

Somewhere in the neighborhood of $12k is still owed on this car, which still has Jennie's name on it as a co-owner. She has taken no action besides trying to get her name removed from the responsibility of paying this debt because the ex-boyfriend didn't insure the vehicle and therefore is at fault. And therefore she has horrible/no credit. She is looking to start building credit so she can buy her own car and not use hand-me downs and old used cars, as well as buying a house down the road.

 

She has contacted a lawyer that is a friend of the family. The lawyer suggested that she drafts a letter to the collection agency and to name a price she would be willing to pay to get her named cleared once and for all so that only the ex-boyfriend would be responsible.

 

 

Her question is: (Since she doesn't have much money laying around) What would be a reasonable offer to make to this agency to clear her name? Since she still believes she should not owe a penny because it was not her fault there was no insurance, she doesn't want to offer much. But she also doesn't want to have her offer get thrown back in her face because it's such a small % of the amount owed.

 

 

Any advice on what she should do or how much to offer? Thanks in advance, because I have no clue on stuff like this.

 

Wow what a big mess and she is probably not going to like this but she is responsible for 100% of what is owed on the loan as she is also a signer on the note. It doesn't matter who was assigned to get the insurance as both parties are named on the note. Since both parties are named on the note both parties are responsible for getting insurance on the vehicle and therefore she is responsible for the note.

 

The best percentage that could possibly get her off of the note would be paying her share of the debt which would be 50% and as MJLiverock pointed out the collection agency is probably not going to be able to change anything on the note. Even with the 50% it may not even be possible for her name to be dropped off she may have to pay off the vehicle entirely in order for this to go away.

 

There maybe some legal things she could get done in a small claims court but she would still be responsible for the loan for at least 50% of what is owed minus any payments she made herself (if from a joint checking account it would be paid on both parties behalf) or were made on her behalf (parents, friends, joint checking account, etc.). I am not a lawyer so I am not sure this would be something that can or can not be done. Taking the other party to court to pay their share of the loan would not get her off the loan but it may help in paying off the note in terms of who is to pay what. This you could then take to the original note holder and they may then take her name off the note once her portion according to the legal settlement is paid off. Again not a lawyer so this may or may not be something that can be done.

[mothershipconnection]

She basically needs to sue the guy and make him pay it off or it won't go away.

I co-signed on a loan for my ex-wife, the entire thing was assigned to her by the judge in our divorce, and after she defaulted I still had to pay off the loan before I could buy a house.

 

She repaid me nearly half of the money, but now has not made a payment in over a year. To get the money at this point, I need to take her to court, where she'll be found in contempt for failing to pay the amount stipulated in our divorce settlement, and may have her wages garnished until I'm repaid.