Hello, I Co-Signed for my boyfriend(at the time) for a 4x4 side x side. Long story short, when we split, we owed 12,780.00. I had the machin...

Question

Hello, I Co-Signed for my boyfriend(at the time) for a 4x4 side x side. Long story short, when we split, we owed 12,780.00. I had the machine here. I wanted to pay it off and sell it and be done. I went to our magistrate and asked if he could make him sign off of it so I could sell it. He told me that if the ex wanted to, he could just keep it after I paid it off and it was totally his. He also told me not to pay anymore on it because I was just helping him out. I tried over and over to have him just sign off of it with no luck. Soooooo, I called to have the lender repo it. They sold it for about 6,500.00 and sent us letters telling us our balance which is like7,200.00. Now am I totally liable for this or is it half and half or all his? Magistrate told me that the ex would have to sue me to pay half. I need a straight answer? Thanks in advance.

Answer

You have received some very bad advice. A voluntary repo is the worst thing to do... now you are in a horrible position, as you can see.

The lender is going to sue both of you, and you will both be liable for the full amount. What that means is that the lender is going to try to collect all of the money from whomever it can get it from. The lender will not collect twice though... I hope that makes sense.

Technically, you would have a claim against the ex for half if you pay the full amount. However, it is NOT a defense to the claim by the lender... in other words, you cannot say to the lender, "I only owe half to you, he owes the other half". That does not work. Two separate issues, even though they are related. You both owe the lender and he may owe half to you.

Answer

Attorney Artim is correct on most things. I only add a few comments.

Co-signing is ALWAYS a bad deal. If a person needs a co-signer, it means that they either have no credit or more likely, bad credit. So the person is using you as their next victim to trade on your good credit. What you are doing by co-signing is saying to the lender "go ahead and make the loan to boyfriend because I promise to pay if he does not." So the lender makes the loan. You then get the shaft when boyfriend decides he no longer needs your credit.

Co-signing is NOT co-owning or co-borrowing. You have only the responsibility to pay if boyfriend does not but no right of ownership. And NEVER buy anything with someone you are not married to - or even worse, agree to co-sign. Co-borrowing is where you and boyfriend together apply for the car loan. That is not co-signing and gives you no ownership rights either unless the car is titled jointly in both names.

You had no ownership rights here. You had an option - you could pay to protect your own credit or not pay and let your credit be trashed. You opted, perhaps because of the magistrate's advice, for the repo. Now the car lender possibly is going to come after both you and the boyfriend as noted for the deficiency.

You can settle this just to clear up the debt and then you can sue the boyfriend for reimbursement.

I don't quite get why you think that you only owe half of the deficiency. This is joint and several liability. That means as between you and the lender and boyfriend, the lender is entitled to recover the money they are owed, $7200. They can get it from you or from the boyfriend or both.

As between you and the boyfriend, if you pay the deficiency, you can recover 100% of what you paid. Why are you limited to 1/2? You would only be limited if you were a co-borrower on the loan. In such case, you would have been obligated to pay at least 1/2 the debt. However, that does not sound like your situation.

The only "good" news is that you do not need to sit around and wait until you are sued. Many lenders will negotiate and will accept a lump sum settlement of something less than 100% of the debt. If you do not have it, start socking money away now. When you have about 50% saved, try to resolve with the lender. Whatever amount you and the lender end up settling for is what you can sue boyfriend for.

If boyfriend was such a deadbeat that he needed a co-signer in the first place, chances are that you are not the only person he has done this to and he probably has little in the way of assets. There is no wage garnishment in PA for a debt like this so its not like you could garnish wages. There is still value in getting a judgment but for enforcement purposes, any small claims court money judgments have to be transferred to the court of common pleas, a matter for which you probably would have to hire a lawyer.