Default on cosigned loan

Could anyone provide me with thoughts regarding my options for getting an individual to pay up on a co-signed loan?
I co-signed a loan for a former employee ( I've since been transfered) so she and her children would not be evicted.
She gave me a signed title to an automobile in exchange, but
retained said car. I don't want her car, I want her to make her monthly payments. I mean her no ill will, but I'm feeling pretty stupid a she is now late on the second installment, and although I can make the payments, I have other expenses I would prefer the money go to. The loan was throug an established bank, and only for one year, for $1,000. We're in Texas. I would so appreciate anyone's comments.

reputationbummer said:

Could anyone provide me with thoughts regarding my options for getting an individual to pay up on a co-signed loan?
I co-signed a loan for a former employee ( I've since been transfered) so she and her children would not be evicted.
She gave me a signed title to an automobile in exchange, but
retained said car. I don't want her car, I want her to make her monthly payments. I mean her no ill will, but I'm feeling pretty stupid a she is now late on the second installment, and although I can make the payments, I have other expenses I would prefer the money go to. The loan was throug an established bank, and only for one year, for $1,000. We're in Texas. I would so appreciate anyone's comments.

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My response:

You were absolutely prudent to have taken collateral for the loan. I understand that you don't want the car; however, taking the same and selling it is your only recourse. She has breached the contract, and it is none of your concern or worry as to why. You have a collateralized loan, and now it's time to exercise your option.

When you sell the car, you are allowed to take, from the proceeds, your principle amount still owing, your costs of advertisement, and other costs such as towing, storage, etc., or any other reasonable expenses incurred by you in obtaining your money. The balance, if any, must go to her.

IAAL

Just my $0.02 worth....

There are several 'Texas' requirements that must be met before you can take possession (either directly or repo) the vehicle. For example:

1) You need to have a Negotiable (no lien) title with the owners signature on the back.
2) You need to have a signed "Title Transfer form" signed by the debtor before the county will recognize the sale.
3) Further, you need to have a written "Loan agreement with security interest". This is one of the ways that you can 'tie' the car to the payback terms of the loan.

If you have all the above, then you can very probably get the car and sell it to recover your 'damages' (repo fee, towing, storage, sale costs, etc.). These can, and will, mount to several hundred dollars which can be added to the 'damages'. Assuming that the car sale price exceeds the total, you will need to send that 'overage' to the debtor. If the auction price does not exceed the 'damages', then you will need to consider legal action against her... as an unsecured claim (not a good position to be in).

My suggestion:
Make every effort to obtain payment WITHOUT taking the car. This includes writing demand letters, etc (send Certified RRR). Spell out your concerns, detail the facts and ask for payment. You could even arrange to 'renegotiate' the terms if needed. If you still cannot get full payment, and all other options have been exhausted, you might still consider Small Claims court before repo'ing the car. You will be in a much better 'footing' (her having a car to get to work, etc.) for her paying the debt.... and the court could order her to 'properly' transfer the collateral to you without all the higher expenses of repo and auction sale.

reputationbummer said:

Could anyone provide me with thoughts regarding my options for getting an individual to pay up on a co-signed loan?
I co-signed a loan for a former employee ( I've since been transfered) so she and her children would not be evicted.
She gave me a signed title to an automobile in exchange, but
retained said car. I don't want her car, I want her to make her monthly payments. I mean her no ill will, but I'm feeling pretty stupid a she is now late on the second installment, and although I can make the payments, I have other expenses I would prefer the money go to. The loan was throug an established bank, and only for one year, for $1,000. We're in Texas. I would so appreciate anyone's comments.

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Thank you to the two of you who responded to my inquiry. You have provided the information I need to get started. I of course hope it won't be necessary to act upon your suggestions, but in the event that I do, I appreciate your sharing your knowledge.