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I co-signed a car loan for a friend. The friend then moved out of CT with the car. I have no access to it and the friend cannot make the payments. Can I have my name taken off as co-signer because the car is out of state and I cannot use it?

This is a question I am asked often as a lawyer dealing with consumer and credit cases. When people co-sign guarantees on big ticket items for friends they often think that they are just vouching that their friend is a great guy.   People think that by signing the paper they are just helping and proving themselves to be a good friend by showing their trust.  What they may not realize is that they are entering into a marriage, a commitment only slightly greater than that of the BMG Music club.

Regardless of where the collateral, (in this case a car), ends up, regardless of who uses it and who is in possession of it, the co-signer is responsible for the payments and the collateral.

If your friend asks you to co-sign a loan for a car, house, lease, or anything else … consider the ramifications.  Think of the long term.  Your credit will be affected when payments are late or skipped.  Whether or not you have a possession of the item, it will follow you.  Remember that relationships break up and the leaver often leaves with the collateral.  Perhaps they even lose or sell the vehicle. As long as the loan is unpaid it remains the co-signers responsibility.

When making the decision to co-sign, think about why your friend may need to have a co-signer?  How is their credit?  Why is it bad?  Do they skip payments? Do they have steady income?  What are their priorities?  Will they care, if your credit gets destroyed?  Do you have the income to cover someone else’s payments to save your own credit?  Is the car worth losing a friendship over?

If you made the decision to co-sign, and now your credit is being negatively affected, you are in a bad place.  You cannot just say ‘I don’t have the car’ or ‘It’s not my car!’.  You vouched for your friend.   You put yourself out as being financially responsible for them on this loan.  You are responsible to pay for it.  Even if you hate them now and you haven’t talked in years, as long as the loan is alive, so is their hold on your credit and your future.

The only way to release oneself from a co-signers personal guarantee, short of negotiating a payoff of the loan, is to file a Chapter 7 bankruptcy.

Yes, it is that extreme a situation. Do not enter into co-signing lightly.

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