Co signer left holding the bag after car wreck !! Need advice please!!
So this really sweet friend of mine has got caught up in a hurricane of really bad circumstances after co signing an auto loan for a new 2008 Hyundai, for her daughter, landing in a perfect storm of things gone badly wrong, afterwards.
She is a responsible home owning teacher with a 20 y o daughter that's made a huge mess.
The daughter already wrecked her mom's car and then her boyfriend (at the time, this last October) and her prevailed on her mother's good nature, to co sign for a new loan, with the express (but unwritten!) understanding that it was only a temporary situation for mom, who only did it to help her get started again.
But after two payments were made on the car, the boyfriend secretly DROPPED the collision insurance on the car and did not tell the mother who co signed, and then not too long after that, the daughter drove too fast on a mountain road, near the lake, went off the side, and rolled the car several times, and totalled it.
The insurance company correctly denied coverage as the premiums had not been paid, the worthless wreckage was towed away and left in a salvage lot, the two kids that bought the car have "no money" and the finance company is threatening to go after mom who co signed the loan, wanting it to be paid off, as the auto loan has gone bad, it is months delinquent, but the collateral is totally vanished, gone to some wrecking storage lot in Bakersfield, where it sat so long, the tow company has some storage lien on the junk that was recently a 2008 Hyundai.
Incredibly, the daughter is now back, begging for $1,000 for a THIRD vehicle, a used truck, and mom doesn't have the money;
She is facing an angry creditor that she thinks could force her into bankruptcy, loss of her home and financial ruin!!
The Hyundai cost $18,000, loan delinquent since December, the uninsured auto, its collateral, was totalled and is gone, the insurance did not pay off, the loan was for 6 years and interest about 10%. Paid out in full over 6 years, I saw the contract for the loan, which amounted to about $31,000 total, including all interest on this brand new $18,000 car.
Mom has a lovely '06 Mazda3, which she own is free and clear, and probably worth $10k.
She consulted an attorney who said as a co signer, yet innocent of bad behavior, she is nonetheless on the hook for the money owed.
I told her this; I agree she is probably almost certainly liable for this, but perhaps she could get rid of the Mazda3, to erase the debt to maybe $10,000 or so and set up a repayment schedule that she could handle on a teacher's salary, and be rid of it all in 3-4 years or so, avoiding credit ruin, and judgment collection efforts.....
I further told her that in my opinion, to give this reckless daughter ANOTHER bite at the apple, cash for a 3rd car, is just WRONG, as it enables more irresponsible behavior....she should get rides until she saves money to buy her own car, all by herself, and that she should make her daughter sign a notarized paper, promising repayment to Mom for the car which she had orally promised to do, "when she got a job later" at the moment she bought the car.
The boyfriend, of course, has since broken up with the daughter, and has totally vanished, and is on the lam, though if it were me I would try and find him and sue him if it would do any good.
The mother would need to buy herself another new car, if she sold her vbeloved Mazda to help erase this debt, and she loves the ideal of an old, genly used Mercedes, if she had to, (that I could help her locate, here in sunny So Cal,) but she told me emphatcally that she loves and adores her only liquid asset - the 2006 Mazda3, as it is the first brand new car she ever had, and doesn't want to sell it just for a thing like this!!
Ideas and your opinions are needed!!
What should she do?
It is giving her nightmares, what are your opinions here?
<--- superschnelle 300 hp 10:1 ECE euro HV, Hochverdichtung = high compression (11/2011) ... Wie im Freien Fall. Nur horizontal.
"I swear to god, it's like I live in a trailer of common sense, and stare out the window at a tornado of stupidity." >'='<