[fancilady]

I hope someone can help me here....I'm not sure what to do.

My husband cosigned a loan for a motorcycle for his son. Not smart and a lesson learned. Well, my stepson got behind and never alerted us. Of course, the lender repossessed the bike. We found out when they showed up at our door and searched the house for the bike. My stepson lives in another town so my husband called him and told him to surrender it to the sherriff's office in that town immediately which he did.

Now they have auctioned off the bike leaving a balance of around $7000. My husband called the lien holder to see what the options were and they advised him that it was going to collections in a few days and they would be contacting him. Well now nearly 3 months later, they finally called. They told my husband that he had to pay in full by Tuesday (they called on a Friday). Obviously we don't have the money just lying around.

He asked to set up a payment arrangement with him directly as we don't trust my stepson to make them. We then would make sure they got made as to teach him a lesson he is going to repay every cent. They rudely told him it was all or nothing and that Tuesday it would go into "default" and there would be additional fees after that.

What does that mean? I assume they will file a judgement but I'm not sure what that means to us either.

We are buying our home and both of our vehicles are in his name. We have a boat that is paid for and two old vehicles that are not in very good running condition. Does this mean that if we transfer any titles should one of these be sold that they have legal ownership since they have a lien? We were considering selling some or all of these to pay them anyway and then make my stepson repay us but I'm not sure if I should or not.

I just want to be prepared for the consequences. Fortunately, my name was not on the loan so my credit was spared but Texas is a community property state so can they involve me as well? Can they garnish wages or bank accounts?

I'm a little panicked as we have always had stellar credit with no issues as we've always paid what we owed and will continue to do that but when they won't accept a payment arrangement what am I to do?

Thanks anyone who can help educate me a litte on what the options are. Should I (he) get an attorney?

[jk]

We found out when they showed up at our door and searched the house for the bike.

Huh? They searched your house? Hopefully it was with your permission because they had no right to do so without it.

My stepson lives in another town so my husband called him and told him to surrender it to the sherriff's office in that town immediately which he did.

good

What does that mean?

it means if you do not pay the debt, they will sue you and (presumably) revcieve a judgement eith the extra charges being placed onto the judgement as well.

I assume they will file a judgement but I'm not sure what that means to us either.

A judgement is what the courts decree. There is no judgement until you are sued.

We are buying our home and both of our vehicles are in his name. We have a boat that is paid for and two old vehicles that are not in very good running condition. Does this mean that if we transfer any titles should one of these be sold that they have legal ownership since they have a lien?

There is only a lein when a lein is placed upon property, which is, again, what the courts must do.

We were considering selling some or all of these to pay them anyway and then make my stepson repay us but I'm not sure if I should or not.

How you pay your debts is up to you and yes, your stepson is liabel to whomever the co-signer is.

I just want to be prepared for the consequences. Fortunately, my name was not on the loan so my credit was spared but Texas is a community property state so can they involve me as well? Can they garnish wages or bank accounts?

This one I do not know. Hopefully others will be more versed in Texas debts

I'm a little panicked as we have always had stellar credit with no issues as we've always paid what we owed and will continue to do that but when they won't accept a payment arrangement what am I to do?

You either pay it now or get sued. In either case, it wil be placed on your CR. A delinquent debt is not as bad as a judgement though so if you can pay it now somehow, that would be better.

There is no requirement to accept payment arrangements. They already had payment arrangements (in terms of the loan) and your stepson (and your hubby as well. Not blaming, justing telling you how it is) and those arrangements were not kept. Why should they accept them now?

Should I (he) get an attorney?

for what? You may want to consult an attorney but there is not much chance of defending against a suit since the debt most obviously is your hubbies responsibility (as well as the stepson but they get to sue either or both, at their discretion)

[Betty3]

A co-signer (your husband) is just as responsible for the debt as the "original" debtor (his son).

They would have to sue in court before they could get a judgment against anyone - then they could seize all non-exempt assets.

Since Tx. is a community property state, you are responsible for all debts of your husband which occured during the marriage.

Texas Post-Judgment Asset Exemptions--(see below)


Homestead: Unlimited. However, property cannot exceed 1 acre in town, village or city, or 100 acres (200 acres for families) elsewhere. Sale proceeds exempt for 6 months after sale. Debtor need not occupy homestead if debtor does not acquire another home. May file a homestead declaration.

Pensions and Retirement Benefits: ERISA-qualified government or church benefits. Funds exempt for county and district employees, firefighters, judges (Keoghs to extent tax-deferred), law enforcement officers' survivors, municipal employees, police officers, state employees and teachers. IRA exemptions for conventional, Roth, SEP and SIMPLE plans. Except for Roth IRAs, IRAs limited to tax-deductible contributions.

Insurance: Life, health, accident or annuity benefits or monies, including policy proceeds and cash values to be paid or rendered to beneficiary or insured. Life insurance present value if beneficiary is debtor or debtor's dependent. Retired public school employees' group insurance. Texas employee uniform group insurance. Texas state college or university employee benefits. Fraternal society benefits. Church plan benefits.

Personal Property: Athletic and sporting equipment, including bicycles. 2 firearms. Home property furnishings, including family heirlooms. Food. Clothing. Jewelry (not to exceed 25% of total exemptions). One two-, three- or four-wheeled motor vehicle per member of family or single adult who holds a driver's license, or who operates vehicle for someone else who does not have a license. 2 horses, mules or donkeys and a saddle, blanket and bridle for each; 12 head of cattle; 60 head of other types of livestock; 120 fowl and pets all up to $30,000 total ($60,000 for head of family). Burial plots. Health aids. $30,000/$60,000 total is reduced by exemptions claimed for tools of trade, unpaid commissions and life insurance cash value.

Tools of Trade: Tools, equipment, apparatus (including boat), motor vehicles, and books used in trade. Farming and ranching implements.

Miscellaneous: Business partnership property.

Wages: Earned but unpaid wages; unpaid commissions up to 75%.

Public Benefits: Unemployment compensation. Workers' compensation. AFDC. Crime victim's compensation. Medical assistance.

Wild Card: None.

[fancilady]

So if I'm reading this correctly they can't garnish wages but can they garnish my checking account? The only thing in there is wages.

Hopefully, I'll be approved for a loan and it won't come to that. I'm trying to do the right thing but if it doesn't work out and I'm not approved for a loan, I'm worried about what will happen.

Sounds like I would have some time to try to sell the boat and two paid for vehicles not being driven by us to pay it...of course it will be more by then but they made us believe if we didn't pay by next week, they could start putting liens on everything we owned.

Thanks for the info. I'm still mostly concerned about my checking accounts at this point. Even if I put them solely in my name, they could possibly garnish them since we are married unless that is exempt as well. I'll just hope for the best that they will be reasonable if I can't get a loan. I mean its not like I'm trying to skip out on them....we do intend to pay one way or another even if we have to give up something else.

Anyone reading this should take my advice to never cosign a loan for anyone....EVER.

[jk]

Anyone reading this should take my advice to never cosign a loan for anyone....EVER.

I would like to change that a bit;

never co-sign for anybody unless you are prepared to actually pay off the loan yourself.

[fancilady]

I would like to change that a bit;

never co-sign for anybody unless you are prepared to actually pay off the loan yourself.

Good point. In my case, we were prepared but were not aware that payments were not made until too late. At this point, the lender will accept payment in full or nothing...no payment plan. Understandable entirely but anytime before cosigning, people should be aware that once a repossession takes place options are extremely limited. Since we had never had anything like this happen before, we were extremely unprepared for the true gravity of the situation. We WERE prepared to make up any delinquent payments etc. and mistakenly took the word of my stepson that the payments had been made. In hindsight, we should have verified this with the lender. The whole situation could have been avoided had we done that. Just hope others can learn from our situation...We certainly have.

So to rephrase - never co-sign unless you are totally prepared to actually pay off the loan yourself and have your credit possibly suffer as a result. If you discover payments are behind, be sure to contact the lender on your own behalf to get the true state of the account.

On another note, assuming I get a loan, I intend to pay in full, not just the settlement amount they offered. Does this mean that it will no longer show on the credit report or will it show a delinquency or repo but show paid in full? Of course, I have to accept either way but is it a realistic request to ask that they remove it entirely from ours since we will be paying in full all the balance owed including legal fees?

Thanks for the responses I've gotten already. I love this forum...I've learned alot just reading through the posts!

[Betty3]

So if I'm reading this correctly they can't garnish wages but can they garnish my checking account? The only thing in there is wages.

Hopefully, I'll be approved for a loan and it won't come to that. I'm trying to do the right thing but if it doesn't work out and I'm not approved for a loan, I'm worried about what will happen.

Sounds like I would have some time to try to sell the boat and two paid for vehicles not being driven by us to pay it...of course it will be more by then but they made us believe if we didn't pay by next week, they could start putting liens on everything we owned.

Thanks for the info. I'm still mostly concerned about my checking accounts at this point. Even if I put them solely in my name, they could possibly garnish them since we are married unless that is exempt as well. I'll just hope for the best that they will be reasonable if I can't get a loan. I mean its not like I'm trying to skip out on them....we do intend to pay one way or another even if we have to give up something else.

Anyone reading this should take my advice to never cosign a loan for anyone....EVER.

If they would get a judgment against your husband (please remember they can't seize any assets or put on any liens unless they sue & get a judgment), they can't garnish wages through an employer in Tx. but once the wages are deposited into a checking acct., they are fair game (can be seized).

If they get a judgment against your husband, they will go after his non-exempt assets, jt. non-exempt assets in both his name & yours & most likely a non-exempt checking acct. in just your name (due to Tx. being a community property state) & if they believe you are probably "hiding" your husband's & joint assets by putting them in your name only.

[fancilady]

Thanks Betty for the info. That's about what I figured. My intent wasn't to "hide" his assets but to protect my own. I have a decent salary also that I'm concerned about. He cosigned without my knowledge at the time so I'm not wild about the whole thing. My salary goes into my checking account and his goes into our joint account.

I do think they would more likely go after the things we have that are paid for which should cover the amount even after it increases should it come to that.

If I am unable to secure a loan to pay off the entire balance, I do believe or at least hope that they will be reasonable as I am doing my utmost to resolve the matter. It seems like it wouldn't be very smart on their part to spend the money for court costs to even file the judgement when I'm attempting to work something out....Time will tell. I'll post tomorrow after I'm approved or denied for a loan. If I'm denied, I'll probably panic all over again....

[Betty3]

Keep us posted.

[fancilady]

Well, the loan company jacked me around all day and I still don't know if we are approved or not.

The lender called repeatedly checking on the status and then was rude to me because I still didn't know.

I have made a decision though. If the loan is approved, I am going to decline it as a joint loan. If they can approve it with my husband's and stepson's name then go for it but I have decided not to include myself and not to exclude my stepson who originated this whole mess.

This was not my debt, the cosign was done without my knowledge. I realize this is a community property state and that any judgement goes against me as well while we are married. I also realize that any debt incurred by him is mine as well should this go to court.

However, I have made a legitimate effort to make arrangements and have been treated rudely for it. If they take us to court, I can prove the effort as I've mailed a certified letter detailing what we can realistically do without risking payments to other lenders. I do realize that payments were not made on the original loan and they would not be required to accept them at this point but I want them to prove that we were given an opportunity to catch up the payments when they were behind before the repossession. They can't do it because we were never notified by them. The first notification we got was the knock on the door looking for the bike.

Another concern is that they were more than willing to discuss the terms of the loan with me when I told them I was the wife of the cosigner even though my name was not on the original loan. I can't even discuss the loan on my own home because my name is not on it so I find that a little scary for privacy reasons. I'm sure it was because I was making an attempt to pay but still I was surprised.

Anyway, that's the latest. I'm frustrated at being treated so rudely when I was trying to do the right thing. The loan wasn't a good idea anyway...obviously the company saw on our credit report it would overextend us and are leery so the delay was to get upper management approval. Probably a good thing as it gave me time to really think about what I was doing. Borrowing money I can't afford would only get us in deeper than we already are.

A day in court may not be so bad since there are issues of notification and privacy. The chips will fall where they will and we will have to deal with the consequences, most likely a judgement against us and my stepson. I'll just have to deal with it. Part of being a family I guess.....I'll take it like a (wo)man.

Thanks everyone on this forum. If nothing else comes from all of this I have learned so much from my experience and other people's as well who post here.