Bankruptcy and car loan?

I cosigned a car loan for my sister in 2005. I just recently found out she has filed bankruptcy. I called the finance comp. and asked them what are my options and if this will be reported on my credit report. I was told they sent her a letter to reaffirm the loan at a lower interest rate, and they will remove all the late payments all she have to do is sign the paper. She tells me she is not sure she wants to do that. If she does not do that I can take over the payments and take the car, but the payments are $583 a month. they are willing to settle for $370. a month. what options do I have. if she does not sign and I take over the car payment at the original contract rate of $583. I would also have to pay the past due amounts of $4005. can I sue her for that money as well as any payments i made because she kept falling behind?

Bankruptcy and car loan?

This is a problem that comes up time and time again when there are co-debtors. There is an easy answer to your question and there is an answer that you may not want to hear.

First of all, when your sister refuses to sign the reaffirmation agreement her attorney is going to list in her Statement of Intent that she either intends to abandon the property to you or she intends to surrender it to the finance company. If she surrenders the car she is off the hook but you are not. If she surrenders the car you owe either the past due payments to redeem the car or you owe the deficiency balance from when the car sells. Her bankruptcy will not relieve you of your obligation to the creditor.

The payment amount of $370 is also only available to your sister. This is the finance company%26#039;s way of going out of their way to make sure they are paid and that your sister is able to keep the car. Since the payment is being lowered by such a high amount, they are also no doubt lowering the interest rate. Depending on the bankruptcy code in your home state, there may be a ceiling on reaffirmation interest they are allowed to charge.

If you take the car from your sister and keep it for yourself, you will have to pay the past due payments and you will have to pay the original contract payment amount of $583. What would be an advisable thing to do is to work out an agreement with your sister to keep the car.

While legally you do have the right to sue your sister, keep in mind she is in open bankruptcy. If you are able to get a judgment against her for any amount, it will be very hard to collect. Also, are you willing to further damage your relationship with your sister this badly?

Do keep in mind that while the finance company is willing to allow your sister to keep the car and reaffirm the debt, the damage is already done to your credit report. Every payment that was missed by 30 or more days has been reported. If the car goes back, what is now simply a poorly paid installment loan entry on your credit report will become a repossession and eventually a charge off.

Best of luck!

Bankruptcy and car loan?

This is complicated. You are responsible for the car loan as cosigner. The reduction in the payments is very large, so one way to handle it is to have her sign the paper to get the reduction and take over the payments and the car. She should not refuse to sign if it does not obligate her in any way. You can probably arrange to pay the past due amounts over time instead of in a lump sum. The lender is primarily interested in not having a bad loan.

As for suing your sister, you really need to see a lawyer. You do not need to sue in order to have a claim in bankruptcy court. If you can be recognized as one of the creditors, you will share with whatever is available to repay creditors.

Bankruptcy and car loan?

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