Re: Another gotcha on cosigns... John, I know that an AU is not responsible for an account I meant why would someone allow anyone to become an AU on their account? There is a greater risk of an AU defaulting (since they have no sole responsiblity for the account) then Person 1 (the original guaranteer for the loan) and a cosigner. At least with a co-signer the original debtor would screw up their own credit as well. Dani
WHAT???? Ok, let's say a person co-signs a car loan for a friend, that friend defaults on the loan, and ends up declaring bankruptcy. THEIR BK is going to show up on the co-signer's credit report?????
Too many insults running through my head. You really need to talk to PsychDoc about your issues. Then again, who would co-sign for sessions? Gib
Re: WHAT???? I am sorry if i sound naive...but I guess when it comes to this stuff, I am. I understand a creditor or CA going after a co-signer for payment because the agreed to be held liable for the debt...but they shouldn't be punished if the other party files bankruptcy! That is horrible. That's why I'm really grateful to everyone here at this site for all the information I've learned/ learning. It really opens your eyes to the way the system works.
Re: Another gotcha on cosigns... You are mistaken. It is a serious violation of the FCRA AND the BK Act for any report to show a BK when the person had not been in BK. Yes the debt can be shown as in default, and actually the debt is still collectible against the co-signer.
Re: Another gotcha on cosigns... LB 59 If a person is a bad risk to a bank they are also a bad risk for the cosigner. Its much the same way with folks who want to land contract for a home. If the buyer can't pay the bank then how can he pay the home-owner?
Re: Another gotcha on cosigns... How can the person be mistaken when the BK is showing on the report?
Re: Another gotcha on cosigns... I have a CA reporting a collection account as "status: in bankruptcy" since i requested validation. Does that qualify also or just accounts that show discharged? They updated it from unpaid before validating and didn't mark it in dispute. Also, they verified it was in bankruptcy with EQ after i disputed it. And they still haven't validated it with me.
Re: Another gotcha on cosigns... Not necessarily. For someone young or with no credit history, the banks won't give them a loan. My parents co-signed with my on my first car. My husbands co-signed for him. We were both 18 and had no credit history, rather than being a bad risk, we were an unknown risk. We were good risks and both paid them off well ahead of time. My parents had to co-sign for my sister a couple of years ago. She's 40, with a good job and 4 kids. Pays cash for everything, has cd's in the bank. She needed to replace her car and cashing the cd's would of incurred a penalty, so she took a loan. She never had a CC and owned her house outright. The bank refused her a loan without a co-signer. They finally got an Amex, only because her hubby travels on business and needs a CC to rent cars. Now, at 40, she finally has a short credit history.
Re: Another gotcha on cosigns... Also, people are usually much less likely to mess a family member, than a bank.
Re: WHAT???? It all depends. If the co-signer makes good (pays off) the debt, then the account will show as paid. But any history (late payments, etc.) will continue to show because (a) they were late (b) the co-signer was obligated to pay the account in the event that the primary borrower did not pay it. Accurate data is accurate data. If the co-signer contacts the creditor and makes arrangements otherwise (to protect his/her credit), then THAT'S what will show up. Whether or not it shows a BK or simply an unpaid past due balance, if there's an outstanding unpaid car loan, it's going to hurt whomever is financially responsible (relative to credit risk scores and credit history) Being a co-signer, it's your responsibility (to yourself) to make sure that the loan is paid and paid on time. Anybody who dares to co-sign for a loan, then simply forgets about it and *hopes* that the primary borrower makes the payments on time is a fool. If, for whatever reason, I chose to co-sign for a loan, you can bet your bottom dollar that I'll be calling the LENDER every darn month to make sure the payment was made. Sure, the primary borrower could stiff you, but that's much better than the primary borrower stiffing you AND you letting your credit history go to heck for 7.5 years.
Re: WHAT???? John, You bring up an excellent point about a cosigner staying on top of things. A lawyer friend of mine tells me he councils divorce clients that give up a house, car, or anything that has joint financing to the ex spouse to write down account numbers and the 800 number of the creditor and call every month to be sure payments are being received.
Re: WHAT???? call every month to be sure payments are being received. keepmine ====================== All well and good but when they're not that's when the cosigner gets screwed> L B 59
Re: WHAT???? Gee, that's a clever observation. Nobody has disputed that fact at all. What we are addressing here is co-signing from a credit history perspective (protecting your credit risk score and history), not the repayment of the loan. You should be in a position to pay the debt off in the event of default BEFORE you co-sign for the primary debtor in the first place.
Re: another issue There is another related problem that got me into trouble. I cosigned for a student loan through Wells Fargo. After a couple years of good payments, the borrower applied for a deferral. WF took about four months to process it and then denied it. I spoke to them weekly during that four month period, and was repeatedly assured that no payments were due while the deferral application was pending. As soon as they denied it, they turned the account over to collections, saying payments should have been made. I got stuck paying the debt plus $2000 in legal fees and penalties. Only after this was over did they tell me that they do not inform the cosigner of a default. Even though I was speaking to them every week, they never let on that there was a problem. They are emphatic that the loan belongs to the primary signer and that the cosigner is not entitled to any info. Had I known this, I never would have cosigned. I don't think my son shafted me - I know he was mislead by the bank, as I was. My opinion is this. If you cosign, have the bills come to you and you pay them. Have the primary lender send you the money. And have some type of agreement that you can take possesion of the car or whatever if you don't get the money. This puts you in charge. Incidently, they never tried to collect from my son; they went after me because I had the money.
Re: another issue Ouch Thomas! When I was a lender, I just never let it get over 30 days without calling the cosigner. So often the case would be a parent trying to help a child and the kid is too embarrased to tell the parent of the problem. Very often the first time the cosigner knew of the problem was when I called to inform them the loan was late.
Re: another issue The first time I knew about the problem was when I made my weekly call to WF to check on the stayus of the deferral. The recording I got gave me a number to call to check. I called and it was the collection agency.
