Co- signer on loan not being paid...

[Stargazin]

My husband is a self employed business owner in Iowa and one of his employees came to him and asked him if he could help him get a loan for him to buy a motorcycle. My husband got the loan in his name and the employee co-signed.. I believe he had to co-sign because he is only 17. This kid couldnt depend on his parents to help so my husband set out to help him. Since then work as slowed and the kid basically quit the job but he promised he would continue to make the payments. The kids mom called and said he couldnt make the payment and neither could she. After a few weeks my husband talked with the father and the father said "I guess your stuck with the payments then buckko". So know we figure we need to take action. What kind of action can we take, what do we need to do to be prepared for court? Also.. the bank didnt get a title for the bike and later on the kid went and got more money to buy something else and gave my husband the impression it wasnt coming out of the loan....granted he should have read it but he was busy at the time.. Total amount owed is about 2,400 and will this hurt our Credit if we let it go a few months?? Thanks for your help

 

[ninalou]

I'm not an attorney, but if the loan is in your husband's name, then he is responsible for all payments. If the payment is late, then it will reflect on his credit.

If I were you, get the motorcycle back in your possession asap and sell it to pay off the loan.

You could try to take the kid to small claims court, but he is a kid. Even if you win - chances are you won't get paid.

 

[JETX]

Needless to say, your husband really screwed up in this case. His main problem is that the 'contract' he entered into with a minor (17 years old) can simply be voided by the minor. All the minor has to do is revoke the contract. Also, this means that he can't take the minor to court to try to enforce the contract.

The most obvious question is, whose name is on the title?? Hopefully, your husband had the forethought to put the vehicle in his name. If so, then he can simpy take the bike (by demand or by 'repo'). If the bike is NOT in your husbands name, then he needs to talk with an attorney to see about getting possession upon revoking of the minor contract.

Another life lesson... NEVER, NEVER, 'loan' your credit to someone else!!!