What is a co-signer’s obligation regarding a defaulted loan?
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What is a co-signer’s obligation regarding a defaulted loan?
I took out a loan with a friend for a motorcycle for him. He didn’t pay. Do I owe if I didn’t know anything about it until the bike was repossessed?I never received any letters about the motorcycle. I had no idea he wasn’t paying. When the repo guy showed up at my house I told him where the guy lived. If I had known that he wasn’t paying I would have taken the bike myself and paid for it.
Asked on June 10, 2011 under Bankruptcy Law, Indiana
Answers:
S.L,. Member, California Bar / FreeAdvice Contributing Attorney
Answered 13 years ago | Contributor
As a co-signer, you would be liable for the loan on which your friend defaulted. The lender could sue you for the deficiency which is the difference between what is owed on the loan and the amount the lender recovered when the motorcycle is sold.
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