How do I assume title as the co-signer on car loan after the borrower's death?

Question

I signed for a car with my room mate she has since passed away. I just found out she is the only person on the title. I am stuck with paying the car and no title. There was no estate, no will or other assets. I want to continue to pay the car, how do I get the title into my name

Answer 1

Technically, there is always an "estate". Control over wealth and possessions of the deceased pass to the heirs of the estate, but until all outstanding debts are satisfied the money is generally kept separate from the personal wealth of the survivors. If there aren't enough assets to cover all liabilities, the estate's valuable property is sold, the money is distributed according to various creditors' priorities, and the remaining debts are discharged.

Now, that's when the deceased is the sole debtor on all their debts; nobody else but that person was liable for the money, and any mobster will tell you that you can't get a corpse to pay up. In your case, you co-signed; you're now the surviving borrower, you're still alive, you have - by your signing the papers - assumed responsibility for this loan, and so you will, all other things being equal, be expected to make good on it.

In your favor, the fact that the person died without a will means that at least the car wasn't willed to another person. If that were the case, any legal fight for the debt and the car title would be between four parties; you, the family, the bank, and the person to whom the car was bequeathed. By the time the dust settled and legal fees were tabulated, my guess is that everyone involved would wish they hadn't been.

If you want the car, or at least want to get the debt paid off via the estate, the first thing you can do is approach the executor of her estate. That could be the parents, since she died without a will, or they could have hired an attorney to take care of these things. Whoever this is, they are the ones who now control her property including the car title, and they are the easiest route to get that title transferred to your name (with the bank remaining as lienholder). I don't know what your relationship or even your familiarity with your late roommate's family is, but if they don't know you very well they may dismiss you out of hand; unfortunately when there's a death, a lot of unscrupulous types come out of the woodwork demanding money for some debt, however implausible, that the deceased supposedly owes. They will very likely refer you to their lawyer if you are not at least a close family friend.

If the family leaves you holding the bag, the next step is to take your case to the bank. The bank has the power to forgive the loan, or at the very least to repossess the car from the estate, sell it and discharge the loan. They might do either of these, but unless your local jurisdiction's laws require them to, don't hold your breath. First off, the bank doesn't want the car. They want their money, and unless it's a really nice car in top condition, and the loan was nearly paid off, they're unlikely to recover the principal at auction. Second, understand that this will reflect on your credit as if you yourself had defaulted on the loan; the repo, any discharged amount, and any/all late notices will go on your credit record, unless the bank agrees to tell the reporting bureaus that it didn't happen that way. Third, if the bank can't get all their money back, and discharges some or all of the loan, they will send you a 1099 (and file a duplicate with the IRS), because discharged debts count as earned income for tax purposes; the bank effectively "paid" you whatever you owed them. They write it off their own taxes; you add it to yours.

If negotiating with the bank fails, you can sue the estate for either the car or the balance of the loan, but I doubt you'll be very successful unless the laws in your jurisdiction have a provision for this situation. You have a claim to the money, because you had a reasonable expectation that the deceased would be able to pay, and thus your taking full liability for this debt is a tort. However, again, the fact you co-signed this loan is a strike against you. Even if you're successful, you'll have to get in line behind any other creditors your roommate had, including credit card issuers, private education lenders (federally-guaranteed loans will be fully discharged, but not all student loans are federally-backed), even the deceased's phone and utility companies (there are some hilariously sad stories about cell carriers, credit card companies, and other creditors refusing to void the deceased's contract without verbal confirmation from the deceased because "that's the procedure"). All of these creditors have legal teams whose sole mission is to get their debt to the front of the line in these situations, and you may very likely not even get the car, because it had to be sold by the estate to cover some other debt the deceased had.

Understand that you voluntarily co-signed this loan, ostensibly with full knowledge of the repercussions of that action; if your roommate found herself unable to pay, for any reason, you would become fully liable for the loan. Any action the bank would take to benefit you in this matter will hurt them, because they're essentially giving up on the primary insurance policy they had on the loan (you). From this website, dealing with a very similar question (but including a third party who was willed the car):

It's possible that ultimately the co-signer could be held entirely responsible for the loan and end up with no ownership of the car.

Answer 2

Usually in most countries if there's no explicit will, all the assets go to the default heirs. These are usually family and relatives. You're neither, so it is unlikely that the car belongs to you. You'll have to get a legal counsel on how to contest the default allocation.