Payoff of Totaled Vehicle

**HenryEB** · 07-17-2012, 04:27 PM

My son cosigned with his girlfriend for a vehicle. They separated and the girlfriend maintain possession of the vehicle, as well as, maintaining the payments on said vehicle. My son has had no contact with the lady, but when he went to purchase a vehicle for himself, there was a problem. The ex girlfriend got into an accident and the car was totaled. She maintained insurance on the vehicle and apparently the insurance sent her a check for the payoff, which she did not use for that cause.

Now they are telling my son that he owes $1800 to the dealer for the payoff of the vehicle since he was the cosigner on the loan. The dealer has the totaled vehicle and my son is wondering whether he can claim possession of the "totaled" vehicle if he pays off the loan. This is also being reported on his credit and he needs to get this matter settled as soon as possible. Does anyone have knowledge as to what his options are in this matter? And, if he does payoff the loan, can he then seek legal action against his ex?

**flyingron** · 07-17-2012, 04:30 PM

The other possibility is that there was more owed on the car than it was insured for (it's value). EIther way, that's what cosigning is all about. Both parties are liable for the loan. He can try to collect from the ex, but absent any sort of contract no and I'm guessing she's probably judgement proof if she is.

Marriages and relationships are easier to get out of than mortgages and car loans.

**Mr. Knowitall** · 07-17-2012, 04:39 PM

If your son is not on the title to the vehicle, his status as cosigner makes him liable for the default on the vehicle but gives him no claim to the vehicle itself. If in fact the secured lender has repossessed the vehicle, he should get credit for its market value (presumably scrap value based upon whatever the wreck fetches at auction) toward the balance he owes on the loan.

If he's only the cosigner, he can attempt to recover the payoff amount in small claims court. Should he win, I can't promise his ex- will be any better about paying him than she was about paying the lender. If he's co-owner, he might have to prove that there was an understanding that his ex- would be fully responsible for the car payments as she was keeping the car; for now I'm assuming he's simply a cosigner and not a co-owner.

As flyingron noted, it's possible that the amount that the lender wants from your son represents the balance of the loan after application of the insurance payment, not that it makes much difference to the question of liability.