So this really sweet friend of mine has got caught up in a hurricane of really bad circumstances after co signing an auto loan for a new 2008 Hyundai, for her daughter, landing in a perfect storm of things gone badly wrong, afterwards.

She is a responsible home owning teacher with a 20 y o daughter that's made a huge mess.


The daughter already wrecked her mom's car and then her boyfriend (at the time, this last October) and her prevailed on her mother's good nature, to co sign for a new loan, with the express (but unwritten!) understanding that it was only a temporary situation for mom, who only did it to help her get started again.


But after two payments were made on the car, the boyfriend secretly DROPPED the collision insurance on the car and did not tell the mother who co signed, and then not too long after that, the daughter drove too fast on a mountain road, near the lake, went off the side, and rolled the car several times, and totalled it.


The insurance company correctly denied coverage as the premiums had not been paid, the worthless wreckage was towed away and left in a salvage lot, the two kids that bought the car have "no money" and the finance company is threatening to go after mom who co signed the loan, wanting it to be paid off, as the auto loan has gone bad, it is months delinquent, but the collateral is totally vanished, gone to some wrecking storage lot in Bakersfield, where it sat so long, the tow company has some storage lien on the junk that was recently a 2008 Hyundai.


Incredibly, the daughter is now back, begging for $1,000 for a THIRD vehicle, a used truck, and mom doesn't have the money;


She is facing an angry creditor that she thinks could force her into bankruptcy, loss of her home and financial ruin!!


The Hyundai cost $18,000, loan delinquent since December, the uninsured auto, its collateral, was totalled and is gone, the insurance did not pay off, the loan was for 6 years and interest about 10%. Paid out in full over 6 years, I saw the contract for the loan, which amounted to about $31,000 total, including all interest on this brand new $18,000 car.


Mom has a lovely '06 Mazda3, which she own is free and clear, and probably worth $10k.


She consulted an attorney who said as a co signer, yet innocent of bad behavior, she is nonetheless on the hook for the money owed.


I told her this; I agree she is probably almost certainly liable for this, but perhaps she could get rid of the Mazda3, to erase the debt to maybe $10,000 or so and set up a repayment schedule that she could handle on a teacher's salary, and be rid of it all in 3-4 years or so, avoiding credit ruin, and judgment collection efforts.....


I further told her that in my opinion, to give this reckless daughter ANOTHER bite at the apple, cash for a 3rd car, is just WRONG, as it enables more irresponsible behavior....she should get rides until she saves money to buy her own car, all by herself, and that she should make her daughter sign a notarized paper, promising repayment to Mom for the car which she had orally promised to do, "when she got a job later" at the moment she bought the car.


The boyfriend, of course, has since broken up with the daughter, and has totally vanished, and is on the lam, though if it were me I would try and find him and sue him if it would do any good.


The mother would need to buy herself another new car, if she sold her vbeloved Mazda to help erase this debt, and she loves the ideal of an old, genly used Mercedes, if she had to, (that I could help her locate, here in sunny So Cal,) but she told me emphatcally that she loves and adores her only liquid asset - the 2006 Mazda3, as it is the first brand new car she ever had, and doesn't want to sell it just for a thing like this!!

Ideas and your opinions are needed!!


What should she do?


It is giving her nightmares, what are your opinions here?


thanks

__________________
1991 560 SEC AMG, 199k <---- 300 hp 10:1 ECE euro HV ...

1995 E 420, 170k "The Red Plum" (sold)

2015 BMW 535i xdrive awd Stage 1 DINAN, 6k, <----364 hp

1967 Mercury Cougar, 49k

2013 Jaguar XF, 20k <----340 hp Supercharged, All Wheel Drive (sold)

Jim how stupid can this mother be, albeit a sweet woman. For goodness sakes the kid wrecked not one but two vehicles prior to the third one she wrecked, this kid needs to take the bus! I am alittle confused that the insurance let the boyfriend drop the collision as I thought most cars not yet paid for had to have collision for just this very situation. I wish your friend well but really this kid is not responsible behind the wheel of a car maybe a 1976 240D would be good for her.

__________________
"It's normal for these things to empty your wallet and break your heart in the process."
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I hope all involved suffer the pain that is due them, it seems the only rational cure for such stupidity. The mother needs to sue both of these children, especially the boyfriend, who was negligent in dropping the insurance, but one is left to ask, how was the boyfriend able to drop the insurance? He must have had an ownership interest in the car as well, meaning she would have known he was a party to the consign, or more likely, it was the daughter who actually dropped the insurance so the couple could have more money to support their obvious drug habits. She should sue both so she has a judgement on file, giving her twenty years to collect the money, and who knows, the two could survive their drug addictions and actually have useful jobs some day.

I've co-signed for my own children, and I think it is something a parent might have good reason for doing so, but to put one's money on the obvious trailer-trash dude in this story, man, that woman deserves everything she's going to get. It will take the lender about an afternoon in court to ruin her life, since loan contracts clearly state that failure to maintain insurance is material breach. Her used car is not worth $18,000, she will lose whatever else is easily attached that will satisfy the $18,000. I don't even think bankruptcy will help, she will probably be forced by the local sheriff to sell her house. I would suggest a 1984 Suburban rather than a Benz, as it is known to provide good temporay sleeping quarters.

Uh, sell the worthless daughter? Hey, selling worthless assests seems to make a lot of money for AIG executives. Looks like she has a choice of Mazda 6 or the house. Probably, the real choice is sell the Mazda 6 and keep the house or loose both. Don't know what she was thinking about the boyfriend. If no ring on the finger or kids in the picture, then don't be paying for someone elses ride. The Mazda 6 is going to loose value after time for sure. The house price will come back in time.
Tom

After that post, maybe you should remove the 'Jolly' part
Never saw somebody read some much into so little.
Maybe BOTNST is right, you shouldn't post unless you're drinking, at least then you would have some excuse, albeit a lame one, for your unhinged ranting.

She should call the state insurance commissioner and find out what the laws are regarding dropping the collision. Whether the insurance company may be complicit in allowing the coverage to be dropped.

Also, read the loan documents VERY closely to determine what, if any clauses are in there pertaining to insurance coverage, and notification if insurance coverage is allowed to lapse. As cosigner of the loan, she should have been notified that there was a lapse.

Get a judgement against the daughter for the amount she will have to repay. Real court document, not a hand written agreement. The girl needs to be legally hooked to the repayment.

And, probably first, talk to an attorney who has experience with these circumstances in California. No substitute for real working knowledge of the system and its ins and outs.

As for another loan for another car? My response would be "Never again"

High schools should make students watch "Judge Judy" for a week . . .

As I handle legal matters involving loans routinely, I must tell you, all you suggest will be fruitless. There is no communication system between banks and insurance companies in regards to insurance status of collaterized vehicles, and an army of lawyers write those loan contracts in order to make sure all liabilities ultimately fall on the signers for any, absolutely any, potential loss - if they cannot be made whole by the insurance company, then the signers are next in line. The idea that insurance companies can be held liable for dropping a policy at the request of the insured? Hardly. She should have held the policy herself or made arrangements to be notified.

Hence reading the documents carefully, you are assuming that there was no language requiring notification.

Notification from who? From the insurance company to the bank? In order for that to be even possible, the insurance company would have to be party to the loan argreement, something that would be, well let's say, rare. It is simply not part of a routine loan contract. The contract is between you and the bank, and you agree to insure the car in the contract. If you let the insurance lapse, you have also agreed to be held liable, it is standard, standard stuff, I doubt a bank would do it any other way, they are not in the business of policing people's idiocy. Part of the credit check in granting the loan is to assertain your equity positions in case they have to sue you for letting the insurance lapse, that is the end of their care on the front end, once they see you have equity in a home in excess of the $18,000, then they are going to give you the loan, which is why this woman has a big, big problem, she either needs to raise $18,000 or get ready to be sued for her house.

insurance company to cosigner

another pretty common clause

Common clause in what? As I said, the insurance company is not a party to the loan agreement. If you are saying such a thing should have been included in her insurance policy, well duh, yes, but that would be up to the co-signer to see to. Since due-diligence is obviously not this woman's strong suit, she's screwed.

Jim B, hope she makes out OK
Sorry for allowing myself to be sucked into a thread hijacking pointless diatribe. All you wanted was a little help, not a bunch of arguing.
I'm out!

Who held the auto policy?


Was the change to HER autopolicy done without her express permission?


Did the daughter hold the auto policy? Was it the boyfriends policy? Do you have a copy of the sales contrack?




Man, the women you find....

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-Justin

91 560 SEC AMG - other dogs dd
01 Honda S2000 - dogs dd
07 MB ML320 CDI - dd
16 Lexus IS250 - wifes dd

it's automatic.

I absolutely agree with this analysis, and I told her last night, that I felt she should try and negotiate repayment and consider liquidating the Mazda3, as I feel the bank is primarily concerned with repayment of the original loan amount, the $18,000 and the interest rate may be re negotiable, and once the loan is paid off the interest obviously stops right then and there.

__________________
1991 560 SEC AMG, 199k <---- 300 hp 10:1 ECE euro HV ...

1995 E 420, 170k "The Red Plum" (sold)

2015 BMW 535i xdrive awd Stage 1 DINAN, 6k, <----364 hp

1967 Mercury Cougar, 49k

2013 Jaguar XF, 20k <----340 hp Supercharged, All Wheel Drive (sold)

Well this is a mess, but it is workable. She may have to sell the car, but I doubt she has to sell the house. I cant see how an 18k loan could bankrupt you. Let the lender sue her and then get on a payment plan.This just goes to show, if the bank does not think the borrower can repay the loan, why should you? I never understood why my dad wouldnt co-sign for me, but knowing how irresposible I was even when I thought I was responsible, I will not cosign a loan for anyone. I have a friend who asked me to co-sign on a 5 thousand dollar loan to fix his jacked up teeth. This guy already has about 100k in all kinds of debt at age 24 and he doesent even have a house! Guess who would be paying that loan right now because someone has not been paying on it?

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1989 560SEC
2016 Mazda 6 6 speed manual
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