Question about being a co-signer

[timetosave]

Hi all. I'm asking this question for my sister. A few years ago, she cosigned a store credit card for our niece so that she could purchase a computer for school. Well, my sister didn't realize that the cc could be used at other stores as well, and didn't realize that they could raise the credit amount on that card. So, our niece ended up charging approximately $7K on the credit card and stopped paying. Now the collection agencies are calling my sister on a daily basis because she is the co-signer. My question is, can the collection agency choose to sue my sister instead of our niece? Our niece is a low life with no job who dropped out of school, so naturally, they would rather come after my sister. Is she SOL?

Now IF they can come after my sister, is there anything she can do now to protect my parent's life savings of only $15K? She has their money in an emigrant direct fund under her name, and she is afraid the agency will go after their money since it is under her name. She is thinking about withdrawing it out and having my parents put the $$ in their own bank, but if she gets sued, will they ask for bank records? If so, how many months/years back? Thanks to all those who can provide some advice...

[AngelinaCat]

Unfortunately, since your sister co-signed for that card, she owns it as much as your neice does. My 'Hub foolishly co-signed for a loan on a vehicle for an acquaintance that was in 'hard times'. After several months of dutifully making the payments, the acquaintnace stopped paying, and we ended up being hit up for the payments. 'Hub made the acquaintance surrender the car, which was sold at auction. We ended up being sued for the difference along with this 'turkey'. We were going to file BK anyway, and that was just one more reason. Our portion was discharged and the 'turkey' has the judgment against him. All this trouble for co-signing a loan.

Your sister needs to move the parent's money out of her account, and have them put into their own account ASAP. Keep the bank records just in case. There are probably several months before anything moves to court, if then. She will get a formal summons to appear if it does. If she does, she needs to appear and explain the situation as you have.

I hope this account has been closed.....

[treehugger1]

First of all, it appears you are early in the collection process. If the money truly belongs to parents, then I don't see the harm in returning it to them. Your sister is currently not being sued, and I doubt that just because an account is in collections implies a suit is forthcoming. Again, if the asset belongs to your parents, then I don't see harm returning it to them.



Just my opinion here. I'm certainly no attorney.

[AngelinaCatHub]

I must 'two cents' this one also: Why did your sister cosign? Bad credit on the niece? Was she a minor? Your sister bought the debt with her signature, sorry to say.

Moving the money can look like protecting assets. Time is on her side right now so get it done so if she gets a Judgment, they can come after anything she owns including that money. How much balance on that card? She might go to small claims Court on her niece first, but really, it is her account not the nieces. The cosigner is a guarantor.

It happened to me as Mrs. said. I knew better, but had too big a heart and in the long run, got screwed. Is your sister a bk candidate? If so, have her list that item too. 'Hub

[timetosave]

Thanks for all your thoughts. We figured she is SOL. It's too bad since she doesn't have any debt of her own, and her credit is really good. Now it will be shot. She is thinking about calling them up and just settling with them by offering to pay $3K.

She co-signed because my niece was a minor, and her parents didn't have the best of credit. Her mom is also our sister, so said sister decided to help them out, never thinking it would turn into this.

The $15K truly belongs to my parents. Unfortunately, our oldest brother has been trying to scam my parents of anything they have, so they asked my sister to put the money away for them so said brother will leave them alone. ugh.... family drama. She is going to wait and see if she can settle with the collection agency first. If she can, she will leave the money where it is.

I also read somewhere that she can ask them to prove that she had co-signed for the debt. I read that often, these agencies don't have the original paperwork to prove that she co-signed and would have to drop the suit. Do you think she has a chance with this route?

[AngelinaCat]

Why don't you put the money away for your parents?

Also, if push comes to shove, your sis can demand that the credit card company produce paperwork with her signature on it. Which brings up another question: Did she fill out the application online?

[timetosave]

Well, I don't live in the same state as my sister and parents do, so it would be a little trickier for me to put the money away for them. Besides, I really don't want to deposit their 15K into a bank account under my name as I don't want to alert the IRS to look into my business. lol.

I believe the original cc company charged off this account, and it now belongs to some collection agency. That is why I'm wondering if they would actually have any proof that my sister was in fact the co-signer. I told her to contact them and ask them to forward to her the proof that she is responsible for this loan. So we will see what happens from there...

[frogger]

In my business, I LOVE co-signers. I have many people that don't qualify, so they must bring me someone that does. When it's time to collect, I double check the original customer, and if they are still in the same financial situation, I go after the co-signer.

Hate that it has to be that way, but it's been the best way to help protect what little I have left. I do specifically tell the co-signers that they will be on the hook if the first signer does not come through.