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Secured Personal Loan

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broke90

Junior Member
Hello,

First of all, thank you in advance for your help.

So this is my situation: I cosigned a secured personal loan for a friend in California. He used his car as collateral. Fast forward 12 months, he stopped making payments, and he ended up moving to Washington. I don't know where the car is, but I believe that a friend of his in California might have it. I made payments on the loan because I did not want it to affect my credit score. Well, I lost my job this year and can't make payments on it anymore. He has been non-responsive and ignores my calls. We are now late on payments for about 2-3 months.

The car is worth about 1.5K (since last time I spoke to the rep) and the loan is a little over 5K. Original loan was for about 8K. The creditor sends statements to WA, and send them to me only when I request for

If the car is found, does the deficiency become unsecured debt? Would they try to collect in CA or WA?

If the car is not found, what would my alternatives be? Would the big bank file a lawsuit in CA or WA?

Thank you again!
 


latigo

Senior Member
Hello,

First of all, thank you in advance for your help.

So this is my situation: I cosigned a secured personal loan for a friend in California. He used his car as collateral. Fast forward 12 months, he stopped making payments, and he ended up moving to Washington. I don't know where the car is, but I believe that a friend of his in California might have it. I made payments on the loan because I did not want it to affect my credit score. Well, I lost my job this year and can't make payments on it anymore. He has been non-responsive and ignores my calls. We are now late on payments for about 2-3 months.

The car is worth about 1.5K (since last time I spoke to the rep) and the loan is a little over 5K. Original loan was for about 8K. The creditor sends statements to WA, and send them to me only when I request for

If the car is found, does the deficiency become unsecured debt? Would they try to collect in CA or WA?

If the car is not found, what would my alternatives be? Would the big bank file a lawsuit in CA or WA?
Wow!. What were thinking, man?

Anyway you asked about venue:

A court in California would be able to render a personal money judgment against you because of the state's Long Arm Statute. This by reason of the fact that the loan transaction was made in that state. You could also be effectively sued in a court of any state having subject matter jurisdiction, provided process could be served upon you within the borders of that state.

This is a bit more complicated however due to the fact that there are co-obligors who may not share the same state of residency, and because of the provisions of California's Commercial Code respecting repossession and disposal of collateral and the deficiency judgment process.

In would be most impractical if not improper for the creditor to file an action for a deficiency judgment against the co-obligors in any state other than where the loan was made.

If you are not able to pay off the loan and be subrogated to the rights of the secured lender, and you are sued for a judgment, you should most certainly cross-claim against the prime obligor/co-defendant seeking a judgment over against him for any judgment that is rendered against you.
__________

You ask: "Does a deficiency judgment become an unsecured debt?"

Secured by what? The word deficiency here means that the original collateral pledged to secure the was disposed of for less that sufficient to satisfy the loan balance. Adjust your thinking cap. Like the one you misplaced in guaranteeing the $5K.
 
So this is my situation: I cosigned a secured personal loan for a friend in California. He used his car as collateral. Fast forward 12 months, he stopped making payments, and he ended up moving to Washington. I don't know where the car is, but I believe that a friend of his in California might have it. I made payments on the loan because I did not want it to affect my credit score. Well, I lost my job this year and can't make payments on it anymore. He has been non-responsive and ignores my calls. We are now late on payments for about 2-3 months.
I could be wrong here, and if I am, then hopefully someone will correct me. But if you cosigned a personal loan for someone else that had something identified as collateral, and payments on the loan have lapsed, then the creditor could file against you in whatever state you currently reside in, and if the creditor was unable to take possession of the thing that was identified as collateral, then you would be liable for the remaining debt on the loan.
 

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