[donnarob]

My son co-signed on a car loan for a "friend" who turned out to be a deadbeat. The friend did not make payments on time and the car was voluntarily repo'ed about 3 years ago. The loan was originated in 2003 - we are located in Georgia.

The bank has charged off the loan and it was on my sons credit report as a charge off. Now after two years a collection agency is threatening to take my son to court for the balance due of about $8000.

My son has tried to talk to his deadbeat friend, but the friend has refused to do anything or pay anything, and even said that his mother is advising him not to do anything. Obviously he does not care at all about the consequences for my son.

The collection agency is threatening to sue. Can they sue my son without suing the guy who was actually the buyer? My son never had posession of the car and the deadbeat was the primary buyer. As far as I know the car was titled in the deadbeats name only.

My son owns a house, but has two mortgages on it that pretty much max out the value, and owns a car, but owes 25K on it. His payments are current on his personal loans and other than his deadbeat friend, my son has always had perfect credit.

Can the collection agency sue the cosigner without suing the buyer? Also, this agency is not the original bank - since this loan was charged off originally, is there anything my son can do to avoid paying off this deadbeats loan? I would have told him not to do this, but he never mentioned it until it was too late.

[aaron]

A charge-off has absolutely no relevance to whether a debt may be collected.

Your so cosigned for the loan, so he can be held responsible for the entire balance. That's what it means to be a cosigner. If your son is sued but his friend is not, he can bring his friend into the litigation to indemnify him. But if his friend has no money, your son will still end up paying the judgment.

[beentheredonethat]

We are going through this right now, 18 years later... don't ever use Ford Motor Credit!!! Back on topic, as a co-signer, you assume the same obligation as the original signer. Your son will be forced to assume the liability, but may sue his "friend" for the balance... I strongly urge him to do this.
A charge-off simply allows a creditor to write-off the loss for tax purposes. The original creditor then is allowed to sell the debt for pennies on the dollar. It does not make the debt dissappear. In fact, debt can follow someone for several decades, how it is handled and the legalities involved can be somewhat frustrating.
Now for some good news. If the contract was signed in Georgia, as it seems to be, there are some perks to this. I know this because our issue happens to be in Georgia and I have poured over the laws for weeks now. There is a saving grace in every state, it's called the "statute of limitations" defense. Unfortunately, in Georgia, the statute allows 6 years to file suit. Once a judgement is entered, the plaintiff has only 7 years to collect. Unlike most other states, these are not renewable in Georgia. The collection can only be reported for 7 years on a credit report, irregardless of further collection activity.
Now the important part to consider, the statute can be start all over again once a payment is made voluntarily. Or even at the mere offer to try to make a payment, don't ever fall for this tactic.
Once a judgement is entered, follow through with the answer to garnishment, even if you don't feel you owe the debt. A debtor is entitled to keep a vehicle if it is required to get to work. A debtor should also not be forced from his residence, although it doesn't stop a lien for foreclosure. Get a consultation from an attorney. A debtor is entitled to a hearing with a judge to determine fair payments and keep from undue hardships. And if your son files suit against his "friend", it will also look better to the judge. He should also appeal the creditor's failure to pursue original debtor. It seems your reliable son was an easy target for the friend and creditor.
Check out Title 9 and Title 18 of Georgia State Law. [COLOR="YellowGreen"]www.lexis-nexis.com/hottopics/gacode[/COLOR] for more information. Good Luck.