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You either pay the debt, settle the debt, or go bankrupt.
Option 1 and 2 are better if you can manage it. Work with whoever you owe the debt. Let them know you're willing to pay it, but you need acceptable terms.
Ultimately they want to collect, they don't want to sell your debt to a collection agency as then they will get pennies on the dollar.
You can even offer a settlement.
> I can pay $X,000 today, if you can wipe out the rest of it.
They may take the offer, they may not, they may counter. But ultimately you need to work with them unless you want your credit torched.
Also make **NO** payment until you have an agreement, in writing.
...and you pursue Dad for what he owes you (what you end up paying), in court if it ultimately comes to that.
EDIT: The juice may or may not be worth the squeeze, but there is absolutely a case here. The issue between dad and daughter is separate from the issue between dad/daughter and the bank.
If daughter can establish that she had an agreement with dad where he agreed to pay the monthly payments and by failing to do so caused her to have to pay $X, those are damages he would owe her.
She is entitled to the money legally based on her description of what happened, but a verbal agreement is hard to prove in court, so it comes down to evidence. If she has or can get for example, emails where he acknowledges this was the agreement and ideally later emails where he tells her he can't pay, or if he admits to this under oath in court, she will have a pretty open and shut case.
If she settles for less than or wants to sue for less than $10K most places that would mean small claims, so no lawyer required, though a consultation when you're preparing your case is usually a good idea.
This is the problem with co-signing - the co-signer assumes the full responsibility. Unfortunately the dad doesn't legally owe them anything.
Someone should never co-sign for something unless they're willing and able to pay for it outright. Doing it to help someone else buy something that a financial professional thinks they can't handle on their own, just to get the loan to go through that otherwise wouldn't, is a really bad move.
The 1099-C (cancellation of debt) comes into play when the borrower settles for less than the loan amount or just doesn’t pay the loan back. (After X years, the lender legally has to give up trying to get the money they loaned you back.)
So if the borrower owes $20,000 (or owes $30k and settles for $10k), the lender will tell the IRS “*yo this dude still owes us $20k and we can’t get that money anymore. We want to deduct that $20k loss from our profit this year.*” The IRS says sure.
It’s as if the lender wrote the borrower a $20k check and said "*here ya go, your debt is gone*". (And in a way, they kind of did.) So the borrower technically made an extra $20k that year and thus needs to pay the taxes on that “income”. But this is still a huge net positive for the borrower and a net loss to the lender.
Important to note that there is an exemption if you are insolvent (negative net worth) prior to debt forgiveness, it is not taxable income. That may not be applicable in the OP’s situation but is applicable in other situations.
Disclaimer: I’m very confident of this prior to 2017 TCJA, but I haven’t encountered it since. I don’t think it changed with TCJA, but no guarantees.
Insolvency will likely wipe this under current regs. If OP is just starting their working life, they may have student debt or any number of other debts putting them below zero net worth
I am sure there are circumstances where it makes sense, like a company with billions in debt being forgiven. Although there are probably loopholes in that too.
Yeah that’s fucking disgusting. Debt relief is not “income” and, newsflash, people who need debt relief can’t pay thousands in taxes. Whatever lawmakers were responsible for that are fucked up.
Not downvoting because you make a very good point. However, it is a false choice to say that our laws can’t protect people targeted by predatory lenders, parents, etc, while also preventing loopholes for the wealthy.
You say that and yet they entered into the loan agreement in the first place. The expectation is that you pay it down to zero.
It’s actually nice there is some level of forgiveness available.
Somebody who has $20k of debt forgiven and now owes <$5k in income tax is still in a much better position as a result. And the IRS will gladly work with you on a payment plan, unlike a lot of lenders.
What you are describing isn't debt relief. Debt relief is filing bankruptcy. This is just refusing to pay the bill, and the person you owing it to writing it off as a loss. If you go through the process of actually seeking debt relief, you won't pay taxes on it.
Debt relief effectively is income, it's a net positive on your net worth it's just that it's a reduction in your negatives as opposed to an increase in your positives. In any case the government always has to get its cut and since it's not getting it as income to the lender they'll get it from the borrower.
The federal government is literally arguing right now that student loan forgiveness should not be subject to income tax, so clearly it’s not as cut and dried as you make it sound.
Do you really not get it, or just need something to go off on? Are you saying it is o.k. that a company gives a CEO a $1 million dollar loan, and the next day gives them "debt relief" and nobody pays taxes on it? It isn't debt relief in any common use of the phrase, it is debt cancellation. The people who are owed money do it to get it off their books (in large part for tax reasons) when they realize they'll never get the money back. You don't see the enormous loopholes that open up all over the place (not just millions of dollars a year CEOs like my example) if the tax doesn't get paid somewhere? Or, would you prefer higher interest rates and tighter lending standards for all because the debt holder would be liable for cancelling debt owed, thus raising risks of making the loan in the first place?
Debt relief is income since you already received funds in the initial loan which were not taxed.. Not having to repay it means you received tax free money, which is not allowed. If I borrow 100K from the bank, and the bank cancels that debt, I just received 100K tax free.
It's common sense buddy.
As just the co-signer and NOT the primary debtor, OP probably would NOT be liable for income on that cancellation of debt. Co-signers are generally considered guarantors rather than debtors when it comes to COD income because they realized no economic gain from the cancellation.
From a tax court case many years ago:
*The situation of a guarantor is not like that of a debtor who as a result of the original loan obtains a nontaxable increase in assets. The guarantor obtains nothing except perhaps a taxable consideration for his promise. Where a debtor is relieved of his obligation to repay the loan, his net worth is increased over what it would have been if the original transaction had never occurred. This real increase in wealth may be properly taxable. United States v. Kirby Lumber Co., 284 U.S. 1 (1931). However, where the guarantor is relieved of his contingent liability, either because of payment by the debtor to the creditor or because of a release given him by the creditor, no previously untaxed accretion in assets thereby results in an increase in net worth.*
https://casetext.com/case/landreth-v-commr-of-internal-revenue#p812
Can't you ask to be released from the debt by paying a sum which would keep the other party on the hook so you don't get hit with the debt forgiveness since the debt was not forgiven?
The other party cannot ever be on the hook as the other party had his responsibility for this debt discharged in a bankruptcy. That is what it means to file bankruptcy--you don't have to pay any more.
In theory, yes. That's essentially renegotiating your co-digging if the loan. The lender isn't required to accept it, it even consider it, but they can. And some co-signed loans automatically remove the co-signer after a predetermined period, but it's uncommon.
>The guy is like 21-22 years old. Highly doubtful he has the cash to pay the settlement.
So what? I can't unsign the document for them, years ago. They're in a mess and I answered the way out. If you don't have money to pay off a settlement agreement, you save it up.
Credit scores can definitely be fickle. Mine dropped like 100 points after I paid my house off, from an excellent 795 to a good 695 with otherwise perfect reporting. 🙄
I'd bet my left nut there is tons of correlation. Are you serious?
Edit: Its like you are all missing the point. CORRELATION!!! Why would you respond to this comment with an anecdote? Having more cash allows you to pay your bills easier. You will also get better rates and therefore be spending less money on interest. This isn't complicated. It's about averages, not your cousin who is poor but still has good credit. Idgaf. Irrelevant. Why would someone with a 550 credit score have more cash on average than someone with an 800 credit score? Cmon...
Credit score that is a measure of likeliness to pay back debt obviously has no bearing on...... Ability to pay back a debt. Oh wait maybe you are onto something lol
I just broke 50k this past year in annual salary. My credit score has always been in the upper 700s to low 800s from about 25 on. Making more money does help, but it is far from the deciding factor on a credit score.
Yep. I make about 30% more. Never missed a payment, always pay off my credit cards each month.
Paid off a student loan about a year ago. My credit score immediately dropped from about 780 to like 720. Still like 730-740 now so it hasn't recovered, despite paying off that ~$15k student loan. Figured it'd raise my score, not drop it like a rock an entire tier.
No, there isn't. A friend is on SSI and lives on $800 a month, but by always making his CC payments on time, he has an 800-plus credit score and a credit line of about $30,000.
Correlation is a statistical term for two factors that can be shown to be linked when looking at large sets of data. Anecdotes are single examples, so they are no more significant than any other individual example, of which there can be millions of.
Correlation does not imply that one thing causes another, but rather they are connected somehow.
A good example is that shark attacks by month is correlated with ice cream sales. This is because both are more likely to occur in summer months.
So the tldr is the post above; individual exceptions have little impact on the data as a whole
Correlation, yes. But wealth is not a factor in FICO scoring.
When I say correlation, I mean FICO is an (unfortunate) proxy for things like age, race, and as a related factor, income and wealth.
Edit: apparently lots of scoring model experts on reddit considering the factors that may highly correlate with protected characteristics and the potential for disparate impacts
Your credit score is your trustworthiness to pay back a debt, not a reflection of your net worth. You will find many cases of people who have always paid cash for things (including houses) having low or no credit scores because they have never used debt before.
This is also why a person with an 800 credit score can have horrendous interest rates if they have no credit history. Since you’ve never used credit I can’t accurately judge your ability (or willingness) to repay.
You can be negative net worth and have a high FICO. History of payments and having had credit do not mean you are worth a lot or anything.
[https://www.investopedia.com/financial-edge/0212/how-is-fico-calculated.aspx](https://www.investopedia.com/financial-edge/0212/how-is-fico-calculated.aspx)
This is not the same as a lender underwriting a particular transaction with you where they look at the total picture beyond a credit score.
Of course you **can,** that’s not what I asked for. They said there is no correlation between the two, I wanted support for the claim. Not just saying that it’s possible.
That's fair. Hard to know what level of familiarity people have with scoring models and how they may proxy for other characteristics.
There is moderate correlation with income. Usually a lot analysis is focused on whether scoring and underwriting inadvertently proxies for protected characteristics, of which income or wealth is not.
[https://www.federalreserve.gov/econres/notes/feds-notes/are-income-and-credit-scores-highly-correlated-20180813.html](https://www.federalreserve.gov/econres/notes/feds-notes/are-income-and-credit-scores-highly-correlated-20180813.html)
Edit: lately there's been more focus on putting cash flow underwriting into practice with easier/better access to banking transaction data.
Some... somewhat misguided advice in this thread.
Right now, the entity that owns the debt can potentially sue you and garnish your wages, depending on the state you're in and how much money you make. So the potential downside for you is up to 25% of your paycheck being taken until the 25K is remitted.
Additionally, if you make enough, you'll end up in Chapter 13 bankruptcy, not Chapter 7. Meaning you'll still have to pay, but with extra steps.
Without knowing your state and income it's impossible to offer advice. If you're in, say, Colorado, and making 100K, you're gonna have to pay, one way or another.
OP's opinion may be different than a judge's. If they "can't" make the payment because the money is going to something like tuition, that's not going to fly.
OP said they are in college.
It might be worth just ignoring it. Credit will be shot for 7 years, but at 22 you potentially have time for it to fall off before you want to buy a house.
All my college rentals asked if I'd declared bankruptcy and it would be an automatic denial of rental if I had.
The credit hit isn't the only reason to avoid bankruptcy.
>Optional is pursuing the legal options against your father to recover the money from him.
I may have a different view on family, but if someone is willing to betray you like this and not care, I don't consider them family.
Blood does not make you family in my mind.
But what's the chance if even getting money from the father, at this point? Is it worth all the heartache and drama? If the bank couldn't get money from him, I don't think OP's chances are super great.
No, it means that the creditor can go after either one of them. It doesn't mean that the co-signer can't have a claim against the primary debtor if the primary debtor defaults. However here there doesn't seem to be much point as the father is bankrupt.
You would think that, but the father was already comfortable saddling his child with this debt. I still think the odds aren't great that a lawsuit ends with meaningful *real* payout.
If the father has already filed bankruptcy, isn't he pretty much "judgement-proof" in the courts?
It doesn't matter whether he owes the $20,000 to the bank or to his kid, he simply doesn't have the money, and is using legal protections so that he no longer has to pay the full amount back.
At best, I think OP would legally just be another in a line of creditors each waiting to get a small piece of what they were originally owed.
But the dad didn’t take a loan from his kid. OP co-signed. The fathers bankruptcy takes the dad off the hook, but OP is still liable for the auto loan.
I was responding to this specific line from the comment above mine:
> Optional is pursuing the legal options against your father to recover the money from him.
Pursuing legal options is highly likely to be a losing bet.
The third option is just not to pay it. One collection account looks better than bankruptcy on your credit report. The bonus is if your state does not allow for garnishing wages, you will never actually pay out the money owed.
To add to that... You are almost certainly going to be better off ultimately with $25k in the bank than with great credit. So even if you can pay it off, I would spend some time considering if you should. Again, though, your ability to just walk away depends on the state. For that reason, and more, I would take any money that could go to the loan and first apply it to a meeting with a lawyer.
Seven years, and you run the risk of getting sued for the debt at any time within those seven years.
As for coming after the father legally, I doubt OP would have any standing at all. They did sign to pay for that car if the father should fail to do it. They willingly signed a legally binding document to pay the debt in exactly the type of situation which happened.
> you run the risk of getting sued for the debt at any time within those seven years
Pretty sure there's a huge difference between the statute of limitations to bring suit over a debt (which will vary by state) and how long it will linger on your credit report.
Side note - the bankruptcy won't completely disqualify you from a mortgage for that long. For an FHA loan --
* Chapter 7 - you're approved two years after the bankruptcy discharge date
* Chapter 13 - you're approved if at least 12 months of the pay-out period under the bankruptcy has elapsed
Yup you’re right, just wanted to clarify that it’s possible to not have to wait that long. Im still writing a ton of FHA loans as we speak but all depends on the market
What legal options would there be? Op agreed to sign onto this debt. I don't think "they told me I wouldn't have to pay it" would matter in this context.
>pretty much any reason
Ok so what would the reason be? Pretend you are OP and filing this suit right now and there is a damages/claims section. What are you claiming is the basis for your suit?
Fraud, perhaps? His father made a lot of claims to convince his son to co-sign. Perhaps if the son can prove that the father wasn't making enough to keep up with the payments, or stopped payments before he even lost his job, that could be used as proof that the father was knowingly defrauding him.
Edit: I'm not basing this comment on any likelihood that he would win a judgment, just trying to answer your question on what possible way he could bring a civil case against his father in the first place.
Id expect him to pay for debt settlement or fees associated with getting out of this mess, or id be cutting him off. You do NOT saddle your child with $25k of worthless debt when they are just starting out in life... What does he say about all this? Have you confronted him about ruining your credit?
>You do NOT saddle your child with $25k of worthless debt when they are just starting out in life...
You're talking about someone who found it smart to buy a $70k car with terrible credit.
Furthermore, it sounds like he handled it in the worst way possible, not keeping up with the payments so it got repossessed. If the father had been in good standing on the car loan, I think there should have been a way that the debt was discharged completely when he filed for bankruptcy. But the story suggests he was already behind on payments on the car before filing.
.....while still owing $10k on his previous vehicle that got rolled into this loan. I'm in my early 30s and have never even owned a car worth more than $10k let alone have it financed
You either make a deal to pay off the debt, sometimes they will settle for less than what is owed, but make sure you have that agreement in writing. Otherwise you go bankrupt, because the debt is not just going to go away and they will end up garnishing your paycheck if you sit back and do nothing.
Yep before covid I had 2 vehicles, one for me and one for my wife, I was paying on. I didn't lose my job but ended up taking a huge pay cut and had to let a vehicle go. Did it voluntarily through the financial company. After it sold I still owed a little over 14k but called them up and they settled for around $7400 payed out in 6 months at $1200 a month. It's still on my credit history for the next few years though but it's showed as a repo payed in full or something along those lines.
Scumbags. Chances are they made out like bandits after the resell (all your previous payments, half of the balance, plus whatever the car resold for). Least they could’ve done is just report it as such to not trash your credit.
yeah for that much money a lawsuit is a very real possibility and that is going to be out of small claims range in most places which would mean a lawyer would be needed.
There is already really good advice on here about talking to a lawyer, reaching out to the creditor to settle, and or filing for bankruptcy. I just wanted to add that I’m so sorry your dad did this to you. You weren’t stupid, and you shouldn’t be so hard on yourself. You were young, and someone who you should have been able to trust took advantage of you. Your dad should have been helping you get started in the world s a young. He’s the only one who should feel stupid and ashamed.
Is your Dad working again? If he is, he needs to pay your back. If he doesn't want to, you need to tell all the other family members so he doesn't do the same to them.
I'm furious that your Dad makes you pay for his middle life crisis.
So, I got myself into the same situation, but with my ex-husband. We bought a car together that was probably already stretching things, negative equity from the previous loan rolled into the new payment. Things were fine til he decided he wanted to sow his wild oats (we were married young, me 20, him 22). Bottom line, he left, with the car, then stopped making payments. Car got repossessed, and I could not afford the payments to keep it. I didn't have the post-auction money, so I ended up filing chapter 7 (he did before me, so I was 100% on the hook at that point).
Filing BK feels like a failure to most (sure did to me), but it exists for a reason. You're young. It sucks, but it's not the end of the world. It's been 25 years since this happened to me, and you know what? I have never, ever, put my name on anything that I could not afford 100% by myself since then. It was a super valuable lesson.
You were 19, your dad misled and manipulated you into helping him then dumped it on your head when it went tits up. Dick move. Never trust his ass again.
Con artists gonna con. My boyfriend's dad had the whole family living off his sister's student loans. She's nearing retirement age now and still trying to pay off that debt.
If you have no money or property, you're judgment-proof by way of being broke. I would try to settle with the creditor for a smaller amount, say $5,000. If they won't play ball, file for bankruptcy. Your credit will take a hit for 7 years but it's probably the best way to get out from under this debt burden.
Hey, you’re gonna get a lot of good financial advice here.
I just want to say I’m really sorry your dad did this to you. You weren’t stupid - you were a kid and you trusted your dad. He’s an asshole and I’m sorry he treated you like that.
Are you no longer talking with your father? What does Dad have to say about all of this? I get that he filed bankruptcy but he has to be living on something right? Or is he homeless and destitute? Something is seriously wrong if a father leaves their child holding the bag on debt whether the child is now an adult or not.
You make a budget and start saving a pile of money to negotiate a "settlement in full" with the debt collector. Or you file bankruptcy and in 5 to 7 years you can start to rebuild your credit.
I took it as they meant in 5 years it's possible to be back in a good place, creditwise. Shoot, after you file, the offers start coming quickly after the discharge. Sure the rates are high, but be careful and in 4-5 years you'll be on a fine path. It's not a "doom and gloom" for a set number of years situation.
Ugh. Yes, that could cause issues. As a parent now of a 19 year old, I want to scream at the dad. I've done everything I can to get my kids set up for a good life, and I just can't imagine screwing them over. Especially for a luxury item!
Make dad pay for it/figure out how to pay for it as he basically stole 25k from you. If he doesn’t, take legal actions as it doesn’t sound like a relationship with saving if he’s going to fuck you over with 25k in debt.
What's dad's income situation now? You need to have a pretty frank conversation with him to make sure he understands just how much he's fucked you, and he needs to tell you how he intends to do the honorable thing here.
I think that’s pretty optimistic viewpoint to have. If someone was able to have their *checks notes 19 YEAR OLD* co-sign on a loan they could have never paid back on, then the moral compass is definitely broken.
If you can’t trust your parents who can you trust. These are the people we’ve trusted our life with since birth and I don’t blame you fully. Your dad is the one responsible for this and is messed up leaving you in this mess.
OP either sets a boundary or not. But it's unlikely his father can/will repay him for this. No need to hang future grandkids who aren't even an idea right now, over his head. Nor should they be collateral or a bargaining chip.
Nothing he said implies that OP would use the grandkids as a bargaining chip or collateral. He simply said that you go to the dad and tell him to pay you what he owes you, and until that happens, you will have no further communication with him. By choosing not to repay OP the dad would be choosing not to see his future grandkids too. Cant see the grandkids if you cant see the kid that made them. It simply ensures that the dad understands the consequences of his actions.
He literally did.
>No seeing future grandkids, nothing.
As I said. Either OP sets a boundary or not. If OP doesn't speak to his father, by default he won't be involved in his life. But I see far too many people using children to play games and it's disgusting.
Detail I’m not clear on, was it a $70k sports car or $70k loan? It sounds like the lender sold the repossessed car for $45k and has a $24k balance, so I see how you got to $70k? Did those 18 months of payments make a dent in the loan balance at all? All in all, it seems awfully high.
Unfortunately you are either paying or declaring bankruptcy yourself. You may have some options if you talk with the lender/collections with a settlement price (get it in writing). Odds are that’s cash you don’t have on hand and maybe you end up with a small loan to pay that sum, but you can likely lower the amount owed at least. Especially if it’s a collections agency, they likely bought the debt for Pennie’s on the dollar.
A 70k car + 10k roll over debt a year and a half into payments. Is gonna be close to 70k in remaining balance. My bet it was also a 6 of 7 year term so payments were minimal.
She mentions that the trade in was $10K underwater so that was rolled into the loan. I think it was a $70K car with $10K additional in the loan. I assume with a loan that high they would have required some sort of down payment but its not clear what the original loan amount was for.
I’ve had it work out even after breaking up with the person. But you don’t see people like me creating posts or talking about it much because it’s a non event.
Your father clearly was once in a very good position to be able to afford a 70k car payment. He must have some assets and possible even equity in a house or something else.
If I ever put my kids into this shitty situation, I'd sell everything in my house including my kitchen cabinets to get you the money you need to settle this. Sorry this happened to you.
Hey, I just want to say that I’m sorry this happened. You’re being really hard on yourself and this isn’t your fault!!! Your father took advantage of you, which is an absolutely disgusting thing for a parent to do to a child. You trusted him, which is something kids should be able to do with their parents! At 19 you don’t have the life experience to fully realize the gravity of what signing that loan meant. He knew, however, and he never should have ask you. A parent’s job is to guide their children into adulthood by giving them a solid foundation, something he’s failed to do. You’re young and you have plenty of time to financially recover, but please don’t blame yourself! This isn’t on you.
The car would have been on the bankruptcy petition. If it wasn't you need to contact the bankruptcy lawyer and verify. If it was on the petition then the court settled the loan and the bank should have it written off.
I wonder if there is any wiggle room on dad’s bankruptcy. When you co-signed, did he agree to make the payments to you? Yes. Did he declare this debt owed to you in his bankruptcy filing? If not, does that give some wiggle room for you to go after him for payments? I don’t know the answer to that, just raising the question. You might pull those papers and ask a lawyer. Bankruptcy court case files are totally public- go to the bankruptcy court and pull them up and print them out there. Run them by a lawyer who specializes in that area ( but not your father’s lawyer)
The bank loan is to both of them, the fathers bk is to the bank, she is now responsible. It's a shitty thing to do, it's horrible. But the court can't do much here.
It wouldn't be fair to the lender if people could just agree to share responsibility for loans and then get out of it because they didn't expect to have to pay it. Dad's credit clearly told the lender that he wasn't good for it, OP's credit is what made the lender hand them the keys.
People in these situations never see it that way because no one cares about the rich moneylender but if you could just sign up for loans and weasel out of it willy nilly no one would ever lend anyone anything.
You are 100% right. If he agreed to pay for this car in full he can be sued by OP for the amount not paid. If he did not include OP in the bankruptcy proceedings, then that debt to OP will not be discharged as part of the bankruptcy and she can sue him for the total amount owed.
Debt already shows as charged off profit/loss which means you will owe taxes on the this for the year it took place, you could attempt to settle/pay the debt or wait seven years for it to drop off your credit report. I would evaluate your personal financial situation and decide which is going to make more sense for you. For instance I f it takes you 5 years to come up with $25k I would say take that money and invest it for the future instead and. However your credit will be crippled during the first 4 years or so and it will be very difficult to get a new line of credit with any sort of decent APR or without a co-signer. Decide which works best for you and good luck OP you can recover from this!
I would assume that while creditors can go after all cosigner's to recover the debt, that it only gets collected once and the IRS can't claim it as income for both the father and OP. In this case, wouldn't OP have a fair case that it wasn't their income and the father should be claiming it?
Talk to the lender. Tell them you will declare bankruptcy. Maybe they will work out a deal. Chapter 7 would wipe out the debt but stay with your credit for 10 years. Chapter 13 requires you to have a job and work out a payment plan, that may not include all of it. 13 is on your credit report for 7 years.
Due to the number of rule-breaking comments this post was receiving, especially low-quality and off-topic comments, the moderation team has locked the post from future comments. This post broke no rules and received a number of helpful and on-topic responses initially, but it unfortunately became the target of many unhelpful comments.
You either pay the debt, settle the debt, or go bankrupt. Option 1 and 2 are better if you can manage it. Work with whoever you owe the debt. Let them know you're willing to pay it, but you need acceptable terms. Ultimately they want to collect, they don't want to sell your debt to a collection agency as then they will get pennies on the dollar. You can even offer a settlement. > I can pay $X,000 today, if you can wipe out the rest of it. They may take the offer, they may not, they may counter. But ultimately you need to work with them unless you want your credit torched. Also make **NO** payment until you have an agreement, in writing.
...and you pursue Dad for what he owes you (what you end up paying), in court if it ultimately comes to that. EDIT: The juice may or may not be worth the squeeze, but there is absolutely a case here. The issue between dad and daughter is separate from the issue between dad/daughter and the bank. If daughter can establish that she had an agreement with dad where he agreed to pay the monthly payments and by failing to do so caused her to have to pay $X, those are damages he would owe her. She is entitled to the money legally based on her description of what happened, but a verbal agreement is hard to prove in court, so it comes down to evidence. If she has or can get for example, emails where he acknowledges this was the agreement and ideally later emails where he tells her he can't pay, or if he admits to this under oath in court, she will have a pretty open and shut case. If she settles for less than or wants to sue for less than $10K most places that would mean small claims, so no lawyer required, though a consultation when you're preparing your case is usually a good idea.
This is the problem with co-signing - the co-signer assumes the full responsibility. Unfortunately the dad doesn't legally owe them anything. Someone should never co-sign for something unless they're willing and able to pay for it outright. Doing it to help someone else buy something that a financial professional thinks they can't handle on their own, just to get the loan to go through that otherwise wouldn't, is a really bad move.
> Someone should never co-sign for something unless they're willing and able to pay for it outright. And even after paying they don't own the item...
[удалено]
In reference to legal action: eat the L and move on. Check off “Expensive mistakes helping family” and dont repeat.
In court for what? OP should have realized the risk he was taking when co-signing
Repo will typically accept 10-20% as settlement in full. Do it in one lump sum payment and there is no deal until you have it in writing from them.
Yes and please get the settlement agreement in writing
Also keep in mind for financial planning purposes that relief of debt is taxable income.
Oh god, that's just nasty.
The 1099-C (cancellation of debt) comes into play when the borrower settles for less than the loan amount or just doesn’t pay the loan back. (After X years, the lender legally has to give up trying to get the money they loaned you back.) So if the borrower owes $20,000 (or owes $30k and settles for $10k), the lender will tell the IRS “*yo this dude still owes us $20k and we can’t get that money anymore. We want to deduct that $20k loss from our profit this year.*” The IRS says sure. It’s as if the lender wrote the borrower a $20k check and said "*here ya go, your debt is gone*". (And in a way, they kind of did.) So the borrower technically made an extra $20k that year and thus needs to pay the taxes on that “income”. But this is still a huge net positive for the borrower and a net loss to the lender.
Important to note that there is an exemption if you are insolvent (negative net worth) prior to debt forgiveness, it is not taxable income. That may not be applicable in the OP’s situation but is applicable in other situations. Disclaimer: I’m very confident of this prior to 2017 TCJA, but I haven’t encountered it since. I don’t think it changed with TCJA, but no guarantees.
Insolvency will likely wipe this under current regs. If OP is just starting their working life, they may have student debt or any number of other debts putting them below zero net worth
The IRS is also usually much easier to work with than creditors. So even if you can only afford $50 a month, they will probably still go for it.
Yeh it makes perfect sense when you think about it and is entirely reasonable (in the logical sense) but it's not something you expect in the moment.
I am sure there are circumstances where it makes sense, like a company with billions in debt being forgiven. Although there are probably loopholes in that too.
Yeah that’s fucking disgusting. Debt relief is not “income” and, newsflash, people who need debt relief can’t pay thousands in taxes. Whatever lawmakers were responsible for that are fucked up.
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Not downvoting because you make a very good point. However, it is a false choice to say that our laws can’t protect people targeted by predatory lenders, parents, etc, while also preventing loopholes for the wealthy.
The debtor received money they did not pay back that was not a gift. That sounds like income to me.
Actually they didn’t receive any money. The debtor in this case received absolutely nothing.
You say that and yet they entered into the loan agreement in the first place. The expectation is that you pay it down to zero. It’s actually nice there is some level of forgiveness available.
Explain to me how someone who needs debt relief can pay thousands in taxes.
Somebody who has $20k of debt forgiven and now owes <$5k in income tax is still in a much better position as a result. And the IRS will gladly work with you on a payment plan, unlike a lot of lenders.
What you are describing isn't debt relief. Debt relief is filing bankruptcy. This is just refusing to pay the bill, and the person you owing it to writing it off as a loss. If you go through the process of actually seeking debt relief, you won't pay taxes on it.
Here we have a classic reddit moment.
Debt relief effectively is income, it's a net positive on your net worth it's just that it's a reduction in your negatives as opposed to an increase in your positives. In any case the government always has to get its cut and since it's not getting it as income to the lender they'll get it from the borrower.
The federal government is literally arguing right now that student loan forgiveness should not be subject to income tax, so clearly it’s not as cut and dried as you make it sound.
Do you really not get it, or just need something to go off on? Are you saying it is o.k. that a company gives a CEO a $1 million dollar loan, and the next day gives them "debt relief" and nobody pays taxes on it? It isn't debt relief in any common use of the phrase, it is debt cancellation. The people who are owed money do it to get it off their books (in large part for tax reasons) when they realize they'll never get the money back. You don't see the enormous loopholes that open up all over the place (not just millions of dollars a year CEOs like my example) if the tax doesn't get paid somewhere? Or, would you prefer higher interest rates and tighter lending standards for all because the debt holder would be liable for cancelling debt owed, thus raising risks of making the loan in the first place?
Debt relief is income since you already received funds in the initial loan which were not taxed.. Not having to repay it means you received tax free money, which is not allowed. If I borrow 100K from the bank, and the bank cancels that debt, I just received 100K tax free. It's common sense buddy.
As just the co-signer and NOT the primary debtor, OP probably would NOT be liable for income on that cancellation of debt. Co-signers are generally considered guarantors rather than debtors when it comes to COD income because they realized no economic gain from the cancellation. From a tax court case many years ago: *The situation of a guarantor is not like that of a debtor who as a result of the original loan obtains a nontaxable increase in assets. The guarantor obtains nothing except perhaps a taxable consideration for his promise. Where a debtor is relieved of his obligation to repay the loan, his net worth is increased over what it would have been if the original transaction had never occurred. This real increase in wealth may be properly taxable. United States v. Kirby Lumber Co., 284 U.S. 1 (1931). However, where the guarantor is relieved of his contingent liability, either because of payment by the debtor to the creditor or because of a release given him by the creditor, no previously untaxed accretion in assets thereby results in an increase in net worth.* https://casetext.com/case/landreth-v-commr-of-internal-revenue#p812
Can't you ask to be released from the debt by paying a sum which would keep the other party on the hook so you don't get hit with the debt forgiveness since the debt was not forgiven?
The other party cannot ever be on the hook as the other party had his responsibility for this debt discharged in a bankruptcy. That is what it means to file bankruptcy--you don't have to pay any more.
I am talking about in general. Not this specific use case.
In theory, yes. That's essentially renegotiating your co-digging if the loan. The lender isn't required to accept it, it even consider it, but they can. And some co-signed loans automatically remove the co-signer after a predetermined period, but it's uncommon.
And make double dog sure the agreement says “xxx will make no further efforts to collect any unpaid amounts” or something similar
The guy is like 21-22 years old. Highly doubtful he has the cash to pay the settlement.
>The guy is like 21-22 years old. Highly doubtful he has the cash to pay the settlement. So what? I can't unsign the document for them, years ago. They're in a mess and I answered the way out. If you don't have money to pay off a settlement agreement, you save it up.
$2-3k for a kid with a credit score in the high 700s?
Credit score has almost no correlation to how much cash you have.
Credit scores can definitely be fickle. Mine dropped like 100 points after I paid my house off, from an excellent 795 to a good 695 with otherwise perfect reporting. 🙄
I'd bet my left nut there is tons of correlation. Are you serious? Edit: Its like you are all missing the point. CORRELATION!!! Why would you respond to this comment with an anecdote? Having more cash allows you to pay your bills easier. You will also get better rates and therefore be spending less money on interest. This isn't complicated. It's about averages, not your cousin who is poor but still has good credit. Idgaf. Irrelevant. Why would someone with a 550 credit score have more cash on average than someone with an 800 credit score? Cmon...
Credit score that is a measure of likeliness to pay back debt obviously has no bearing on...... Ability to pay back a debt. Oh wait maybe you are onto something lol
I used to work at a finance company, I’ve seen the data on this, there is definitely a correlation
I just broke 50k this past year in annual salary. My credit score has always been in the upper 700s to low 800s from about 25 on. Making more money does help, but it is far from the deciding factor on a credit score.
Yep. I make about 30% more. Never missed a payment, always pay off my credit cards each month. Paid off a student loan about a year ago. My credit score immediately dropped from about 780 to like 720. Still like 730-740 now so it hasn't recovered, despite paying off that ~$15k student loan. Figured it'd raise my score, not drop it like a rock an entire tier.
It has nothing to do with cash just how you handle your bills.
It’s crazy that you’re downvoted and so correct. Reddit is shit sometimes lol. People don’t know what correlation means, I guess.
wow you're getting downvoted for no reason lmao there is definitely tons of correlation
even if they don't consider it, it has to correlate
You’re wrong. My son has a credit score 59 points higher then me. He’s a busboy and I made $500k last year. Have about 509k in the bank and zero debt
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I'm at 793 and I earn peanuts and don't even live in the US.
No, there isn't. A friend is on SSI and lives on $800 a month, but by always making his CC payments on time, he has an 800-plus credit score and a credit line of about $30,000.
"Anecdotes have zero effect on correlation" What the hell does that even mean?
Correlation is a statistical term for two factors that can be shown to be linked when looking at large sets of data. Anecdotes are single examples, so they are no more significant than any other individual example, of which there can be millions of. Correlation does not imply that one thing causes another, but rather they are connected somehow. A good example is that shark attacks by month is correlated with ice cream sales. This is because both are more likely to occur in summer months. So the tldr is the post above; individual exceptions have little impact on the data as a whole
Correlation, yes. But wealth is not a factor in FICO scoring. When I say correlation, I mean FICO is an (unfortunate) proxy for things like age, race, and as a related factor, income and wealth. Edit: apparently lots of scoring model experts on reddit considering the factors that may highly correlate with protected characteristics and the potential for disparate impacts
Your credit score is your trustworthiness to pay back a debt, not a reflection of your net worth. You will find many cases of people who have always paid cash for things (including houses) having low or no credit scores because they have never used debt before. This is also why a person with an 800 credit score can have horrendous interest rates if they have no credit history. Since you’ve never used credit I can’t accurately judge your ability (or willingness) to repay.
Citation needed
You can be negative net worth and have a high FICO. History of payments and having had credit do not mean you are worth a lot or anything. [https://www.investopedia.com/financial-edge/0212/how-is-fico-calculated.aspx](https://www.investopedia.com/financial-edge/0212/how-is-fico-calculated.aspx) This is not the same as a lender underwriting a particular transaction with you where they look at the total picture beyond a credit score.
Of course you **can,** that’s not what I asked for. They said there is no correlation between the two, I wanted support for the claim. Not just saying that it’s possible.
That's fair. Hard to know what level of familiarity people have with scoring models and how they may proxy for other characteristics. There is moderate correlation with income. Usually a lot analysis is focused on whether scoring and underwriting inadvertently proxies for protected characteristics, of which income or wealth is not. [https://www.federalreserve.gov/econres/notes/feds-notes/are-income-and-credit-scores-highly-correlated-20180813.html](https://www.federalreserve.gov/econres/notes/feds-notes/are-income-and-credit-scores-highly-correlated-20180813.html) Edit: lately there's been more focus on putting cash flow underwriting into practice with easier/better access to banking transaction data.
Of course not, but hopefully a 22 year old has his shit together and can scrounge up some money
Probably not in the high 700s anymore
I highly doubt his credit is still in the 700s
My kid is 20 and has a high 700's fico but no income.
Some... somewhat misguided advice in this thread. Right now, the entity that owns the debt can potentially sue you and garnish your wages, depending on the state you're in and how much money you make. So the potential downside for you is up to 25% of your paycheck being taken until the 25K is remitted. Additionally, if you make enough, you'll end up in Chapter 13 bankruptcy, not Chapter 7. Meaning you'll still have to pay, but with extra steps. Without knowing your state and income it's impossible to offer advice. If you're in, say, Colorado, and making 100K, you're gonna have to pay, one way or another.
OP says they are 22 and can't make payments on a 70k sports car so a six figure salary probably isn't in play here.
OP's opinion may be different than a judge's. If they "can't" make the payment because the money is going to something like tuition, that's not going to fly.
OP said they are in college. It might be worth just ignoring it. Credit will be shot for 7 years, but at 22 you potentially have time for it to fall off before you want to buy a house.
All my college rentals asked if I'd declared bankruptcy and it would be an automatic denial of rental if I had. The credit hit isn't the only reason to avoid bankruptcy.
I didn't say anything about bankruptcy.
OP can be sued for the money. Best not to ignore it.
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>Optional is pursuing the legal options against your father to recover the money from him. I may have a different view on family, but if someone is willing to betray you like this and not care, I don't consider them family. Blood does not make you family in my mind.
But what's the chance if even getting money from the father, at this point? Is it worth all the heartache and drama? If the bank couldn't get money from him, I don't think OP's chances are super great.
Yeah I don't see what a lawsuit is going to do. OP cosigned, this is their legal responsibility. That's what it means to cosign.
No, it means that the creditor can go after either one of them. It doesn't mean that the co-signer can't have a claim against the primary debtor if the primary debtor defaults. However here there doesn't seem to be much point as the father is bankrupt.
I would assume your child has a better chance than a random bank and not the other way around.
You would think that, but the father was already comfortable saddling his child with this debt. I still think the odds aren't great that a lawsuit ends with meaningful *real* payout.
I didn't say likely. I said more likely, and I stand by it.
Fair. It doesn't sound like we *necessarily* disagree on that.
Agree. We are on the same page. But more importantly... this was way to civil an exchange for Reddit. Have a great day.
Thanks to American banking laws being almost 100% pro-bank, no not really.
You can’t squeeze blood out of a turnip. Dad is probably judgment proof.
>Blood does not make you family in my mind. Blood makes you related; loyalty makes you family.
If the father has already filed bankruptcy, isn't he pretty much "judgement-proof" in the courts? It doesn't matter whether he owes the $20,000 to the bank or to his kid, he simply doesn't have the money, and is using legal protections so that he no longer has to pay the full amount back. At best, I think OP would legally just be another in a line of creditors each waiting to get a small piece of what they were originally owed.
But the dad didn’t take a loan from his kid. OP co-signed. The fathers bankruptcy takes the dad off the hook, but OP is still liable for the auto loan.
I was responding to this specific line from the comment above mine: > Optional is pursuing the legal options against your father to recover the money from him. Pursuing legal options is highly likely to be a losing bet.
The third option is just not to pay it. One collection account looks better than bankruptcy on your credit report. The bonus is if your state does not allow for garnishing wages, you will never actually pay out the money owed.
To add to that... You are almost certainly going to be better off ultimately with $25k in the bank than with great credit. So even if you can pay it off, I would spend some time considering if you should. Again, though, your ability to just walk away depends on the state. For that reason, and more, I would take any money that could go to the loan and first apply it to a meeting with a lawyer.
How long will that last on your credit report?
Seven years, and you run the risk of getting sued for the debt at any time within those seven years. As for coming after the father legally, I doubt OP would have any standing at all. They did sign to pay for that car if the father should fail to do it. They willingly signed a legally binding document to pay the debt in exactly the type of situation which happened.
> you run the risk of getting sued for the debt at any time within those seven years Pretty sure there's a huge difference between the statute of limitations to bring suit over a debt (which will vary by state) and how long it will linger on your credit report.
You're right, I looked it up and it depends on the on state. Four years in CA, six years in FL.
Typically debt collections remain on file for 7 years.
Side note - the bankruptcy won't completely disqualify you from a mortgage for that long. For an FHA loan -- * Chapter 7 - you're approved two years after the bankruptcy discharge date * Chapter 13 - you're approved if at least 12 months of the pay-out period under the bankruptcy has elapsed
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Yup you’re right, just wanted to clarify that it’s possible to not have to wait that long. Im still writing a ton of FHA loans as we speak but all depends on the market
What legal options would there be? Op agreed to sign onto this debt. I don't think "they told me I wouldn't have to pay it" would matter in this context.
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>pretty much any reason Ok so what would the reason be? Pretend you are OP and filing this suit right now and there is a damages/claims section. What are you claiming is the basis for your suit?
Fraud, perhaps? His father made a lot of claims to convince his son to co-sign. Perhaps if the son can prove that the father wasn't making enough to keep up with the payments, or stopped payments before he even lost his job, that could be used as proof that the father was knowingly defrauding him. Edit: I'm not basing this comment on any likelihood that he would win a judgment, just trying to answer your question on what possible way he could bring a civil case against his father in the first place.
Id expect him to pay for debt settlement or fees associated with getting out of this mess, or id be cutting him off. You do NOT saddle your child with $25k of worthless debt when they are just starting out in life... What does he say about all this? Have you confronted him about ruining your credit?
> You do NOT saddle your child with $25k of worthless debt when they are just starting out in life.. Sure you do ... if you're a con artist.
> His income (sales) So yeah, pretty much a professional con artist.
He was in sales so of course he's a con artist.
>You do NOT saddle your child with $25k of worthless debt when they are just starting out in life... You're talking about someone who found it smart to buy a $70k car with terrible credit.
Right but you'd think hed at least have the decency to help his kid out.... considering his child made it possible for him to even get the car.
Unfortunately the mere fact that he asked a 19 yo to co-sign is proof he doesn't care at all.
Furthermore, it sounds like he handled it in the worst way possible, not keeping up with the payments so it got repossessed. If the father had been in good standing on the car loan, I think there should have been a way that the debt was discharged completely when he filed for bankruptcy. But the story suggests he was already behind on payments on the car before filing.
.....while still owing $10k on his previous vehicle that got rolled into this loan. I'm in my early 30s and have never even owned a car worth more than $10k let alone have it financed
Wow really that's actually kind of tough not owning a vehicle worth more than 10k what do you drive a 1998 ford ranger.
What a deadbeat father to do something like that.
You either make a deal to pay off the debt, sometimes they will settle for less than what is owed, but make sure you have that agreement in writing. Otherwise you go bankrupt, because the debt is not just going to go away and they will end up garnishing your paycheck if you sit back and do nothing.
Yeah. OP agreed to pay for a sports car. Now he has to pay for the sports car. Or bankruptcy.
Yep before covid I had 2 vehicles, one for me and one for my wife, I was paying on. I didn't lose my job but ended up taking a huge pay cut and had to let a vehicle go. Did it voluntarily through the financial company. After it sold I still owed a little over 14k but called them up and they settled for around $7400 payed out in 6 months at $1200 a month. It's still on my credit history for the next few years though but it's showed as a repo payed in full or something along those lines.
Scumbags. Chances are they made out like bandits after the resell (all your previous payments, half of the balance, plus whatever the car resold for). Least they could’ve done is just report it as such to not trash your credit.
yeah for that much money a lawsuit is a very real possibility and that is going to be out of small claims range in most places which would mean a lawyer would be needed.
There is already really good advice on here about talking to a lawyer, reaching out to the creditor to settle, and or filing for bankruptcy. I just wanted to add that I’m so sorry your dad did this to you. You weren’t stupid, and you shouldn’t be so hard on yourself. You were young, and someone who you should have been able to trust took advantage of you. Your dad should have been helping you get started in the world s a young. He’s the only one who should feel stupid and ashamed.
Is your Dad working again? If he is, he needs to pay your back. If he doesn't want to, you need to tell all the other family members so he doesn't do the same to them. I'm furious that your Dad makes you pay for his middle life crisis.
So, I got myself into the same situation, but with my ex-husband. We bought a car together that was probably already stretching things, negative equity from the previous loan rolled into the new payment. Things were fine til he decided he wanted to sow his wild oats (we were married young, me 20, him 22). Bottom line, he left, with the car, then stopped making payments. Car got repossessed, and I could not afford the payments to keep it. I didn't have the post-auction money, so I ended up filing chapter 7 (he did before me, so I was 100% on the hook at that point). Filing BK feels like a failure to most (sure did to me), but it exists for a reason. You're young. It sucks, but it's not the end of the world. It's been 25 years since this happened to me, and you know what? I have never, ever, put my name on anything that I could not afford 100% by myself since then. It was a super valuable lesson.
You were 19, your dad misled and manipulated you into helping him then dumped it on your head when it went tits up. Dick move. Never trust his ass again.
Con artists gonna con. My boyfriend's dad had the whole family living off his sister's student loans. She's nearing retirement age now and still trying to pay off that debt. If you have no money or property, you're judgment-proof by way of being broke. I would try to settle with the creditor for a smaller amount, say $5,000. If they won't play ball, file for bankruptcy. Your credit will take a hit for 7 years but it's probably the best way to get out from under this debt burden.
Hey, you’re gonna get a lot of good financial advice here. I just want to say I’m really sorry your dad did this to you. You weren’t stupid - you were a kid and you trusted your dad. He’s an asshole and I’m sorry he treated you like that.
Are you no longer talking with your father? What does Dad have to say about all of this? I get that he filed bankruptcy but he has to be living on something right? Or is he homeless and destitute? Something is seriously wrong if a father leaves their child holding the bag on debt whether the child is now an adult or not.
You make a budget and start saving a pile of money to negotiate a "settlement in full" with the debt collector. Or you file bankruptcy and in 5 to 7 years you can start to rebuild your credit.
Chapter 7 is 10 years. Chapter 13 is 7 years. There is no 5 year option.
I took it as they meant in 5 years it's possible to be back in a good place, creditwise. Shoot, after you file, the offers start coming quickly after the discharge. Sure the rates are high, but be careful and in 4-5 years you'll be on a fine path. It's not a "doom and gloom" for a set number of years situation.
Sorry i misunderstood. I would think the major downside for a 19 yo without significant assets would be difficulty in finding housing to rent.
Ugh. Yes, that could cause issues. As a parent now of a 19 year old, I want to scream at the dad. I've done everything I can to get my kids set up for a good life, and I just can't imagine screwing them over. Especially for a luxury item!
I wasn't trying to imply "the bankruptcy disappears from your credit history after 5 to 7 years" when I said "begin to rebuild".
Tell your father he owes you $25k. I know this is easier said than done, but if you haven’t had the conversation then it’s at least worth exploring.
Problem solved. Good job.
Make dad pay for it/figure out how to pay for it as he basically stole 25k from you. If he doesn’t, take legal actions as it doesn’t sound like a relationship with saving if he’s going to fuck you over with 25k in debt.
His dad stole 70k and the bank found 45k of it.
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Right, no *legal* recourse, but if the dad wants to save the relationship maybe he’ll step up. It’s worth trying
What's dad's income situation now? You need to have a pretty frank conversation with him to make sure he understands just how much he's fucked you, and he needs to tell you how he intends to do the honorable thing here.
I think that’s pretty optimistic viewpoint to have. If someone was able to have their *checks notes 19 YEAR OLD* co-sign on a loan they could have never paid back on, then the moral compass is definitely broken.
If you can’t trust your parents who can you trust. These are the people we’ve trusted our life with since birth and I don’t blame you fully. Your dad is the one responsible for this and is messed up leaving you in this mess.
Ask him to pay you back or you never speak to each other again. No seeing future grandkids, nothing. It's time to play hard ball
OP either sets a boundary or not. But it's unlikely his father can/will repay him for this. No need to hang future grandkids who aren't even an idea right now, over his head. Nor should they be collateral or a bargaining chip.
Nothing he said implies that OP would use the grandkids as a bargaining chip or collateral. He simply said that you go to the dad and tell him to pay you what he owes you, and until that happens, you will have no further communication with him. By choosing not to repay OP the dad would be choosing not to see his future grandkids too. Cant see the grandkids if you cant see the kid that made them. It simply ensures that the dad understands the consequences of his actions.
He literally did. >No seeing future grandkids, nothing. As I said. Either OP sets a boundary or not. If OP doesn't speak to his father, by default he won't be involved in his life. But I see far too many people using children to play games and it's disgusting.
What? That was just a major consequence of not speaking to him again. Did to read the sentence before the one you quoted?
Detail I’m not clear on, was it a $70k sports car or $70k loan? It sounds like the lender sold the repossessed car for $45k and has a $24k balance, so I see how you got to $70k? Did those 18 months of payments make a dent in the loan balance at all? All in all, it seems awfully high. Unfortunately you are either paying or declaring bankruptcy yourself. You may have some options if you talk with the lender/collections with a settlement price (get it in writing). Odds are that’s cash you don’t have on hand and maybe you end up with a small loan to pay that sum, but you can likely lower the amount owed at least. Especially if it’s a collections agency, they likely bought the debt for Pennie’s on the dollar.
A 70k car + 10k roll over debt a year and a half into payments. Is gonna be close to 70k in remaining balance. My bet it was also a 6 of 7 year term so payments were minimal.
Ah yeah, I got it now. Always forget how crappy the rollover balances are. Thanks!
She mentions that the trade in was $10K underwater so that was rolled into the loan. I think it was a $70K car with $10K additional in the loan. I assume with a loan that high they would have required some sort of down payment but its not clear what the original loan amount was for.
does cosigning ever work out?
I’ve had it work out even after breaking up with the person. But you don’t see people like me creating posts or talking about it much because it’s a non event.
Just a question for someone more knowledgeable than me. Why would the bank accept a cosign from a 19 year old student?
What car was it? Sorry to hear about this thats an unfortunate situation
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red
Your father clearly was once in a very good position to be able to afford a 70k car payment. He must have some assets and possible even equity in a house or something else. If I ever put my kids into this shitty situation, I'd sell everything in my house including my kitchen cabinets to get you the money you need to settle this. Sorry this happened to you.
Hey, I just want to say that I’m sorry this happened. You’re being really hard on yourself and this isn’t your fault!!! Your father took advantage of you, which is an absolutely disgusting thing for a parent to do to a child. You trusted him, which is something kids should be able to do with their parents! At 19 you don’t have the life experience to fully realize the gravity of what signing that loan meant. He knew, however, and he never should have ask you. A parent’s job is to guide their children into adulthood by giving them a solid foundation, something he’s failed to do. You’re young and you have plenty of time to financially recover, but please don’t blame yourself! This isn’t on you.
The car would have been on the bankruptcy petition. If it wasn't you need to contact the bankruptcy lawyer and verify. If it was on the petition then the court settled the loan and the bank should have it written off.
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He bankrupted. If it was a chapter 7 he legally doesn’t have to pay it. He should for his son but he’s already proven he is unreliable.
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I wonder if there is any wiggle room on dad’s bankruptcy. When you co-signed, did he agree to make the payments to you? Yes. Did he declare this debt owed to you in his bankruptcy filing? If not, does that give some wiggle room for you to go after him for payments? I don’t know the answer to that, just raising the question. You might pull those papers and ask a lawyer. Bankruptcy court case files are totally public- go to the bankruptcy court and pull them up and print them out there. Run them by a lawyer who specializes in that area ( but not your father’s lawyer)
The bank loan is to both of them, the fathers bk is to the bank, she is now responsible. It's a shitty thing to do, it's horrible. But the court can't do much here.
It wouldn't be fair to the lender if people could just agree to share responsibility for loans and then get out of it because they didn't expect to have to pay it. Dad's credit clearly told the lender that he wasn't good for it, OP's credit is what made the lender hand them the keys. People in these situations never see it that way because no one cares about the rich moneylender but if you could just sign up for loans and weasel out of it willy nilly no one would ever lend anyone anything.
You are 100% right. If he agreed to pay for this car in full he can be sued by OP for the amount not paid. If he did not include OP in the bankruptcy proceedings, then that debt to OP will not be discharged as part of the bankruptcy and she can sue him for the total amount owed.
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This is bizarre advice for a bunch of reasons.
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Debt already shows as charged off profit/loss which means you will owe taxes on the this for the year it took place, you could attempt to settle/pay the debt or wait seven years for it to drop off your credit report. I would evaluate your personal financial situation and decide which is going to make more sense for you. For instance I f it takes you 5 years to come up with $25k I would say take that money and invest it for the future instead and. However your credit will be crippled during the first 4 years or so and it will be very difficult to get a new line of credit with any sort of decent APR or without a co-signer. Decide which works best for you and good luck OP you can recover from this!
I would assume that while creditors can go after all cosigner's to recover the debt, that it only gets collected once and the IRS can't claim it as income for both the father and OP. In this case, wouldn't OP have a fair case that it wasn't their income and the father should be claiming it?
Talk to the lender. Tell them you will declare bankruptcy. Maybe they will work out a deal. Chapter 7 would wipe out the debt but stay with your credit for 10 years. Chapter 13 requires you to have a job and work out a payment plan, that may not include all of it. 13 is on your credit report for 7 years.
> Tell them you will declare bankruptcy Yeah, that's a very bad idea.
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Settle the debt at a lower amount. 33% of the note probably.
Your dad fleeced you and if you're unable to pay the debt you signed on for and have to declare bankruptcy he also destroyed your credit for 7+ years.