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  1. #1
    Join Date
    Jul 2008
    Posts
    4

    Question Co-Signer Rights and Suing Original Debtor

    My question involves collection proceedings in the State of: Michigan

    I was stupid and helped a friend QUTIE a while ago get furniture on credit. Of course she defaulted. In the meantime my credit took a turn for the worse with our OWN personal hardships and I'm now trying to get things back in order.

    I am about done with clean up except for this x-friends debt. They are still contacting my mother-in-laws house and sending mail saying they will sue if I don't pay. I can't even tell you the number of what collection agency this is with now. I've lost track.

    My question is this:

    1. Can they sue me if I don't work and don't have an income? I don't own a home or a car in my name. We are renting right now so my husband doesn't "own" a home either.

    2. Can I sue my x-friend for the amount she defaulted if she was the original debtor and I was the co-signer? through small claims court?

    The amount owed is approx. $2500 or so. I do not have the money and have more important things to worry about than HER debt so its not even an option for me to pay it.

    Our loan officer basically said this debt wouldn't be a problem for me when we purchase a home because they will run my husbands credit for the loan and not mine anyways. I just want to know if they DO sue me do they have any way to get money from me in a legal way even though I don't have an income and my husband didn't sign as co-signer.

    Thank you for any help !!

  2. #2
    Join Date
    Apr 2007
    Location
    Il.(near StL,Mo.)
    Posts
    5,252

    Default Re: Co-Signer Rights and Suing Original Debtor

    Yes, they can sue you since you co-signed for the debt & get a judgment against you. They can then seize any non-exempt assets, allowed in your state, with your name on them. Even if you have no income or assets at this time, it is possible you might in the future. Judgments are good for 10 years in Mi. & are renewable. Since Mi. is not a community property state, they can't seize any income/assets in your husband's name only.

    Yes, you can try suing your friend in small claims court to get back what you paid on the debt. You can sue for up to $3,000 in small claims court in Michigan. However, remember you did sign as a co-signer to be responsible for the debt if you friend defaulted.

    Do you know how long ago the last payment was made on the debt - I was wondering if possibly the SOL has elapsed for collection of the debt.

  3. #3
    Join Date
    Jul 2008
    Posts
    4

    Default Re: Co-Signer Rights and Suing Original Debtor

    ok..so if i do get sued for the amount then i can't have anything in MY name for 10 years? and does that mean ANYTHING? Like no car no house nothing?? how does that work?

    And I CAN sue her for the amount? But what are the chances of getting a settlement in my favor if she was the original debt holder? I know i signed the contract and all...but will they hold her responsible for her part of not even paying it??

    Thank you for your help.

  4. #4
    Join Date
    Apr 2007
    Location
    Il.(near StL,Mo.)
    Posts
    5,252

    Default Re: Co-Signer Rights and Suing Original Debtor

    If they would get a judgment against you, they can seize all non-exempt assets (& garnish wages) that are allowed in your state with your name on them. They will usually also go after joint assets with your name on them. The judgment is good for 10 yrs. & they can renew it for another 10 yrs. if they do so before the first 10 yrs. elapse. These are the exempt assets in Mi. (assets they can't seize):
    Michigan Post-Judgment Asset Exemptions--

    Homestead: Real estate to $31,900 ($47,825 if 65 or disabled). Property cannot exceed 1 lot or 40 acres rural. Property held as tenancy by entirety exempt against debt of only one spouse. Spouse or child of deceased owner may claim exemption.

    Pensions and Retirement Benefits: Funds exempt for ERISA-qualified plans, firefighters, police officers, legislators, public school employees and state employees. IRA exemptions for conventional, Roth, education, SEP and SIMPLE plans. IRAs limited to contributions that were made more than 120 days before filing, and limited to tax-deductible contributions for non-Roth IRAs. Roth IRAs and regular IRAs up to $1,095,000 per person.

    Insurance: Life, endowment or annuity proceeds if cannot be used to pay beneficiary's creditors. Life or endowment proceeds if beneficiary is insured's spouse or child. Life insurance proceeds if beneficiary is married. Fraternal society benefits. Disability, mutual life or health benefits.

    Personal Property: Building and loan association shares up to $1,075 par value, in lieu of homestead. Burial place, church pew, clothing. Family pictures, appliances, books and household goods, up to $3,000 total. Food and fuel for 6 months. Motor vehicle up to $2,950.

    Tools of Trade: Tools, implements, stock, motor vehicle or other items that enable the debtor to carry on his business up to $1,000.

    Miscellaneous: Business partnership property.

    Wages: Head of household debtors may exempt 60% of weekly wages (but not less than $15.00 per week) plus $2.00 per dependent other than spouse. Other debtors may exempt 40% of weekly wages (not less than $10.00 per week).

    Public Benefits: Veteran's benefits. Workers' compensation. Unemployment compensation. AFDC. Crime victim's compensation. Social welfare benefits.

    Wild Card: None.

    You can try suing her in small claims court for any amt. you pay on the debt including court costs. However, we have no way of knowing what decision any individual judge will make. The problem is you did co-sign agreeing to be responsible for the debt if your friend didn't pay. It's possible though that the judge will rule in your favor since your friend was the "original" debtor.

  5. #5
    Join Date
    Jul 2008
    Posts
    4

    Default Re: Co-Signer Rights and Suing Original Debtor

    thank you very much for the information !!

    Well since she's an x-friend (her way of avoiding the debt) I think that even if I filed a small claims suit she'd be scared enough to do something about it. I think at this point she thinks I filed for chapter 7 and that the debt was wiped clean but I didn't do that. I was able to avoid chapter 7.

    In my opinion since she never respected me as a friend and pretty much defaulted on the loan RIGHT away she deserves to be sued no matter what I did as far as co-signing.

    One more question: Let 's say i Do file a suit. If for some reason she does do something and takes care of the debt can i not follow thru on the suit? I've never sued anyone and don't know the protocol?

    Thank you.

  6. #6
    Join Date
    Apr 2007
    Location
    Il.(near StL,Mo.)
    Posts
    5,252

    Default Re: Co-Signer Rights and Suing Original Debtor

    You can sue her if she owes you anything - money that you put out to pay on the debt. (for example if you would be able to pay the complete debt to the creditor to keep from getting a judgment against you, you can sue her to get your money back) If she pays the complete debt herself, there would be nothing to sue her for. You would be out no money. . . . Or if they would happen to get a judgment against you & seized any assets of yours, you can sue her to get back what the assets are worth.

    The problem is though if she would owe you any money & you sued her & got a judgment against her, is collecting on the judgment. She would have to have an income/assets to collect from.

    It seems from your post neither one of you are currently paying anything on this debt. I'm not sure that you paid anything at all - seems as if you might not have.

  7. #7
    Join Date
    Jul 2008
    Posts
    4

    Default Re: Co-Signer Rights and Suing Original Debtor

    well she does work and i know where she works and i know that she can't NOT work. At the minimum I would hope to get garnishment of wages to get the money back.

    Thank you so much !

  8. #8
    Join Date
    Apr 2007
    Location
    Il.(near StL,Mo.)
    Posts
    5,252

    Default Re: Co-Signer Rights and Suing Original Debtor

    You're welcome. Good luck to you.

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