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P. Simmons
P. Simmons, Attorney
Category: Legal
Satisfied Customers: 34556
Experience:  16 yrs. of trial experience
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I took out an auto loan for a friend, due to his bad credit,

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I took out an auto loan for a friend, due to his bad credit, our agreement was for only 2 years, its been going on for 3 years now and he won't transfer it to his name. He is making car payments and insurance. His credit is still bad and he claims that no bank would qualify him.
I am looking to purchase a house and this auto loan of course shows up on my credit as debt, increasing my DTI

What actions can I take to force him to remove my name off the vehicle without damaging my credit history? Also he is in CA and I am currently residing in TX.
Hi, My name is Philip. I am an attorney with over 16 years experience. Hopefully I can help you with your legal question.

I am sorry for this dilemma. Can you tell me, what was your agreement? That is, when you entered into this agreement with him (to sign for him) did you have an agreement when he would be required to take the loan over? If so, was the agreement put in writing?
Customer: replied 3 years ago.

Hi Philip, yes we signed agreement in Oct. of 2010 - unfortunately I never got a copy of it - trusted his word ( my mistake).


Written agreement stated that this "contract" would only last 2 years. I have asked him now to provide me with a copy, but of course he won't knowing that I would most likely use it against him.


I thought about cancelling ins. and closing bank acct. to prevent future payments but understand that it would hurt me in the long term, especially if i am looking to purchase property.


Thank you

The problem you face is called "the statute of frauds"

This is a law that requires all contracts that last a year or longer to be in writing.

You have to prove that (it becomes an element in your case) if you want to sue to collect.

What you did it right. You had a contract, in writing, and a set end date for the contract.

So you have a claim...but you need that contract.

Now...if you sue, you would be able to have power of "discovery" the court can order him to produce.

SO this is possible. You have a contract....even if he lost his copy, if he would acknowledge you did have a written contract, that would satisfy the statute of frauds requirement.

Then this turns into a basic contract law question

And what you describe? You have a great case.

With a few notes

1. If he is in CA, then CA is the place you will need to file this claim. With you in TX that can present a challenge. Possible, sure. But you will need to find a lawyer in CA to file this case for you.

2. If he claims that there was no contract? That may be tough to could certainly present evidence to the court to try and impeach him...or perhaps if there is someone else who knew of the contract, they can testify. But you will need to show the court that there was a contract

BotXXXXX XXXXXne...if you had a written contract? You can enforce it...but you will need to prove that there was a contract.

Let me know if you have more questions..happy to help if I can
Customer: replied 3 years ago.

Yes it makes sense; the problem is he might deny it or not even acknowledge it - he is not trustworthy.


Can I call the repo services and have them pick up the car from him? Since the car belongs to me on all papers...


Do I have any other options? Besides dragging him to court?

Ahh...sorry, I did not catch that you are also the owner of the car

IF you are the owner of the car (on the title to the car as either the owner or the lien holder) then can repossess the car. He has breached the contract so you can enforce your contractual right to repossess the car. That would put him into the position to have to sue you ,in TX, to recover the car. That if he has poor credit, I suspect he would have a tough time finding the money to hire a lawyer and sue. And even if he did, what you describe you have the right to repossess.

That does not extinguish the loan...but it regains possession

Please let me know if you have more questions...happy to assist if I can
Customer: replied 3 years ago.

Philip you did well!


Yes, I am the sole owner. One more question - IF he does sue me in TX - can the court order me to pay him the amount that he's already paid on the loan?


This is a 6 yr. loan and he's been making pmnts for the past 3 yrs.

Not if he is breached the contract.

If he is in breach, you have a right to be compensated for your losses. can not "profit" from this...your remedy if he breaches is to recover the "damages" you suffer.

So he sues you, you counter sue him for your damages. You are entitled to collect damages for this breach. have to prove up how this has harmed you. A drop in your credit rating would be harm. Inability to obtain credit would be harm. To the extent you can prove you were harmed, you can be compensated.

So that car has some equity in it...if you take it, sell it, pay off the loan, you can only keep from the proceeds (after the loan is paid) what you can prove as damages. The remainder you will need to return to your "friend"

I have to step away for approx 1 hour but will be happy to cover any follow on questions when I return

P. Simmons and 5 other Legal Specialists are ready to help you
Customer: replied 3 years ago.

You've been a great help! and I very much appreciate your advice.

I am definitely understand that I will not profit from this, since my only wish to either remove my name off the loan or actually take this car into my own possession and handle it from there.


I will let you know if I have any more questions.


You have been very helpful. Thank you

You bet

best of luck in this fight