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Sorry for the long story...but need advice.

My husband was suppose to cosign for a car that his brother wanted. When he went to the dealership, they told him he would have to be the primary signer since he has better credit and that his brother will be a cosigner. They also told him after 18 months they could switch it. Not a year and his brother started missing payments and at the year mark it was repossessed. Now the car is going up for auction and my husband is responsible to pay the loan off, money we don't have.

Can we take his brother to court? The loan owed is about $25,000.00. Can a judge order his brother to pay by garnishing his wages?

Need help and advice..

PS we are in NJ, if that makes a difference.

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    The primary/secondary designations on each borrower are irrelevant in the eyes of the lender - both parties are equally responsible to repay the debt. If they have trouble collecting from one, they'll just press the other, but both will have ruined credit. – CactusCake May 1 '18 at 13:55
  • I misread the question and didn't see that the brother is the cosigner now, but I think my answer is still relevant. @CactusCake is right though, both of their credit scores will be ruined. You're better off trying to make the payments, and speak to the brother for any reconciliation. – trashpanda May 1 '18 at 13:57
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    Sorry, but questions about legal disputes between individuals are off-topic on this site. – Ben Miller May 1 '18 at 13:59
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    I'm voting to close this question as off-topic because it is about a legal dispute between individuals. – Ben Miller May 1 '18 at 14:00
  • Are you certain that the loan company has the right to sue you byond the reposessed value of the car? – Glen Pierce May 1 '18 at 14:33
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IANAL, but as your husband's name is on the contract so he's responsible for making the payments, and the court will tell your husband that he shouldn't have signed for the car in the first place -- I appreciate that's not what you want to hear.

Personally, I'd speak to the brother to see if he can contribute anything and appeal to his good side. Taking this to court will cost you more in the long run.

  • Just to reiterate a good answer, a cosigner is just as responsible for making the payments - there's no implicit expectation that one is more responsible that the other, so suing probably won't get you anywhere. – D Stanley May 1 '18 at 14:03
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    It is true that the OP’s husband owes this money from the perspective of the bank. I think the OP understands that now. The question is whether or not OP’s husband has a legal case against the brother, and we don’t have enough information to answer that question (and it is off-topic for this site). – Ben Miller May 1 '18 at 14:03
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    This doesn't really address the question. Whether the OP is liable to the dealership is a separate question from whether the BIL is liable to the OP. – Acccumulation May 1 '18 at 15:34
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    @Acccumulation - yup, you're right. I misread the question at first and didn't see that the brother became the cosigner so deleted my answer... but then I thought about it some more and figured my answer is still relevant (the husband can take the brother-in-law to court, but it won't have the outcome OP's hoping for) so then undeleted the answer. Then somewhere between CactusCake leaving a (pretty spot on) comment and me going to edit my answer, OP deleted their account... so I thought it wasn't worth editing. – trashpanda May 1 '18 at 15:44
  • @DStanley I'm not (really) disputing your "a cosigner is just as responsible" claim, but if liability is equal, why would the lender have insisted that the OP's husband was the primary signer and not cosigner? – TripeHound May 2 '18 at 15:32
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Yes you can take your brother to court, but that will likely yield nothing. Even if a judgement is won, it probably won't be paid. You can utilize small claims court, so a lawyer does not need to be hired, which will reduce the outlay of money. However, any judgement won will unlikely be paid.

As adults, when we make mistakes, they are solved by forking over money. Cosigning, or borrowing money for a car for your brother (in this case), is a big mistake and will cost you guys money. Sorry for the bad news.

There are really only two options:

1) Deal with the bank directly and take over payments. This will have the least effect on your credit. Get your brother off the loan and title and satisfy the lien. One way to do part of that is to sell the car, or, you can sell one of your existing cars and drive this one instead.

2) Let the car go to auction. This will have a repossession on your credit, and will kind of kill your credit score. This is not always a bad as it sounds. The car will be sold for less than what it is worth so you will likely owe the bank about 15k. They will then attempt to collect that 15k from you, and you will have that on your credit.

If choosing #2, you will likely have a collection on your account for the difference between what the car brings and the amount owed. You can then attempt to settle the debt for less, but that will take some time of non-payment.

In a way this could be a blessing in disguise. If your BIL had a friend who borrowed this car, then hurt someone through negligent driving, you and your husband could be held liable. That could cost you guys in the hundreds of thousands of dollars.

Cosigning is a really bad idea. Buying a car, that one cannot pay cash for, is a bad idea. In this case you did both. Once you can find a way to pay off this lien, you can move forward with your lives. Learn from this and never cosign, and never buy a car that you cannot pay for with cash.

  • Looks like the car was already repossessed, so no need to look for getting sole title / selling the car. Hopefully value of the loan was reduced by a fair amount already. – Grade 'Eh' Bacon May 1 '18 at 14:51
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    @Grade'Eh'Bacon true, but I bet they can probably get it back from the bank. The bank might require them to make the loan current, and I would ask that the late payments be removed from the history. The bank is motivated to do this as they are more likely to get their money. Provided cash can be had, this could be a win-win for both parties. – Pete B. May 1 '18 at 15:01
  • They would indeed have to bring the loan current to get the vehicle back (and they may have to pay bailiff fees as well). It could end up worthwhile if the car can be sold for more than what it will fetch at auction, but to achieve this you need the cash on hand. I imagine if they had the cash they wouldn't already be in this situation. So that leaves getting another loan as the only option to bring this one current - and considering they have likely racked up several 30/60/90 late payment flags for it to have gone to repossession already, the only offers are going to be at extortionate rates. – CactusCake May 1 '18 at 15:11

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