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Richard, Attorney
Category: Business Law
Satisfied Customers: 55473
Experience:  32 years of experience practicing law and a businessman.
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My daughter is 22, and she cosigned for a friend of hers on

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My daughter is 22, and she cosigned for a friend of hers on an auto loan in April, 2013. She did not fully understand what she was getting into. The primary signer has already been late with a payment. What are her options? Can her name be removed as the co-signer? If the primary signer defaults will they come after my daughter for the money, and will this negatively impact her credit if she decides to purchase a car on her own. The big question is can she get out of his situation?
Welcome! My goal is to do my very best to understand your situation and to provide a full and complete answer for you.

Good afternoon. This is a difficult situation your daughter is in as I'm sure you suspect. There are two contractual relationships here. First, there is the contract with your daughter and her friend with the bank, and then there is the one between your daughter and her friend. With regard to the contractual relationship with the bank, your daughter is full liable for the unpaid balance of the note if it isn't paid. If not paid, the bank can repossess the car, sell it, and both your daughter and her friend are jointly and severally liable...meaning the bank can pursue either or both of them for the full amount owed until the bank gets paid in full. But, with regard to the contractual relationship between your daughter and her friend, if your daughter has to pay any part of the loan, she can sue her friend to recover. Once the suit is filed and a judgment awarded, your daughter would become a judgment creditor, and if her friend doesn’t then pay the judgment, she can have the sheriff serve a summons on her friend for a debtor examination. That forces her friend to meet her in court and answer questions under oath about her friend's assets. After that information is obtained, your daughter has the power to attach bank accounts, have the sheriff seize other personal property, and/or place liens on any non-homestead property to satisfy the judgment. North Carolina, unfortunately for your daughter, does not allow wage garnishment. If her friend does fail to pay the loan and your daughter doesn't pay as co-signer, it will impact your daughter's credit negatively.

This is the part of my job I don't like...when the law is not in favor of my customer. I wish I could tell you that your daughter could easily get out of this situation, but, I can only provide you information based on the law so that you can act on the best available information to you. ………..I wish I had better news, but can only hope you recognize and understand my predicament and don't shoot the messenger. I'm sorry!

Thank you so much for allowing me to help you with your questions. I have done my best to provide information which will be helpful to you. If I have not fully addressed your questions or if you have any follow up questions, or if I have misinterpreted your questions in any way, please do not rate me yet, but simply ask a follow up question without rating so I can provide you with a fully satisfactory answer. If I have fully answered your question(s) to your satisfaction, I would appreciate you rating my service with 3, 4, or 5 faces/stars so I can receive credit for helping you today. I thank you in advance for taking the time to provide me a positive rating!
Customer: replied 4 years ago.

One follow up question. Let's say the primary signer misses 1 or 2 payments, or falls 60+ days behind. Will they pursue my daughter for the money? Secondly, will the poor payment history show up on my daughter's credit report?

Thanks for following up. Yes, they will likely pursue your daughter for the money. And, it will likely show up on your daughter's credit report if she's a co-signer; if she's simply a guarantor, it would only negatively impact her credit report if the bank turns to her and she fails to pay under her guaranty.
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