Co-Sign, Bankruptcy, Co-owner, Property, Agreement, Re-possession.
What To Do When… You Are A Co-Signer.
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The objective of the What To Do When… podcast is to discuss common legal scenarios faced by everyday citizens in Virginia. Critzer and Cardani practice law throughout Virginia and focus their practice around the state’s capital of Richmond, in the Piedmont region. Tune in and subscribe to learn about legal topics such as reckless driving by speeding, bad lawyers, Will Knows Weed, juvenile defense, juvenile sex crimes, reckless driving, the legalization of marijuana in Virginia, divorce 101, Child Support, There is Still Hope, and others.
What To Do When… You Are a Co-Signer.
On this legal video podcast chat in Critzer Cardani’s What To Do When… podcast series, please join our hosts Scott Cardani and Jackie Critzer as they share about What To Do When… You Are a Co-Signer. This video and audio podcast episode focuses on a legal slant on how one can use legal wisdom if and when co-signing with another person here in Virginia.
Tune in today for not only our top 3 take-aways, but also some chat about the following subject matters and other helpful action items from a ‘legal chat slant’ from Critzer Cardani’s legal partners.
* How to Avoid being a co-signer.
* Jackie Critzer and Scott Cardani discuss the concept of co-signing and its implications for co-ownership and shared responsibility for payments.
* Jackie Critzer highlights the potential consequences of not making payments as agreed upon, including the impact on credit scores and legal action.
* Jackie Critzer and Scott Cardani discuss the risks of co-signing loans, including the impact on credit worthiness and the possibility of default.
* Parents may co-sign student loans or credit cards, taking on financial risk for their children’s obligations.
* Jackie Critzer explains the impact of bankruptcy on co-signers and debtors.
The objective of the What To Do When… podcast is to discuss common legal scenarios faced by everyday citizens in Virginia. Critzer and Cardani practice law throughout Virginia and focus their practice around the state’s capital of Richmond, in the Piedmont region. Tune in and subscribe to learn about legal topics such as reckless driving by speeding, bad lawyers, Will Knows Weed, juvenile defense, juvenile sex crimes, reckless driving, the legalization of marijuana in Virginia, divorce 101, Child Support, There is Still Hope and others.
Thank you for sending us your feedback, questions, or topic suggestions for future #WTDW | What To Do When… episodes by emailing [email protected].
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Transcript:
What To Do When… Intro 00:01
Welcome to What To Do When… A podcast from real lawyers with real perspective, where we explore a variety of legal issues and scenarios. Each week we focus on a new topic and discuss what to do when and if any of these legal scenarios ever happened to you or a loved one. With over 40 years of combined legal experience, our hosts offer their unique perspectives and insights on a range of real life legal situations.
Jackie Critzer 0:28
Hi, welcome back to another podcast here at Critzer Cardani. In Richmond, Virginia. I’m Jackie.
Scott Cardani 0:34
I’m Scott. What’s on the docket for today, Jackie?
Jackie Critzer 0:37
What To Do When… You Are a Co-signer.
Scott Cardani 0:41
All right, co-signer. What the heck does that mean?
Jackie Critzer 0:43
And how to avoid it. So a co-signer much to a lot of people’s dismay means that you have a co-owner. So let’s say I want to go buy a car back here at the dealership right behind us Hendrick Chevrolet. And it doesn’t matter really how much it is. But let’s just say it’s a big price tag, and I don’t have enough credit of my own.
Scott Cardani 1:08
Like a $100,000 truck?
Jackie Critzer 1:10
Sure, let’s say $100,000 truck. I don’t have enough credit of my own or maybe income on my own. Maybe I’m fresh out of college.
Scott Cardani 1:16
20 years old.
Jackie Critzer 1:17
I’m just a kid. But I want this $100,000 truck.
Scott Cardani 1:36
Because you deserve it.
Jackie Critzer 1:23
Yes, I do. And the dealership says that’s really nice. But how about someone who is more credit worthy sign with you someone who has longer employment history, longer credit history, better payment history? I said, Okay, fine. Sure. Scott Cardani is gonna go do it for me, that’ll be great. And I call you up and I say, Scott, I need a co-signer on the car. And you say absolutely sure… don’t choke.
Scott Cardani 1:45
Sorry.
Jackie Critzer 1:47
What that means is, if you did that, we now own the responsibility for the payments together and we own the car together. Not me over you, not you over me. We own it all together equally.
Scott Cardani 2:02
Wouldn’t be the car be titled in your name alone?
Jackie Critzer 2:04
No, sir.
Scott Cardani 2:06
Hmmmmm…. Interesting. How many of you didn’t know that?
Jackie Critzer 2:08
Co-signers means co-owners co-registered. Here’s where it gets tricky. I maybe let’s just say didn’t make the payments as I was supposed to. And they’re calling Scott and they’re saying hey, you co-signed on this, you got to pay and he’s like, I don’t have the money to pay. I’m paying for 14 other cars, my other 15 kids? And he says, Well, you know, what am I supposed to do? Can’t I just go? Can she turn the car in? Well, I could turn the car in. But my co-owner can’t force me to turn that in.
Scott Cardani 2:41
Really?
Jackie Critzer 2:42
Really. So when you co-sign for somebody, you are betting your credit worthiness or your pocketbook, on their ability to pay.
Scott Cardani 2:52
OOOOH. Again, we, you know, we always try to be kind and nice, and we’re all about that. But you really got to know the risk and the rewards of what you’re doing and understand it. And you know, and you can, like, Jackie could be the best person in the world. I’ve known her for years, and I choose to co-sign with her. That doesn’t, that still means she could not default on a loan. For some reason. Maybe she loses her job tomorrow.
Jackie Critzer 3:18
Sure.
Scott Cardani 3:18
And she’s too embarrassed to tell me, you know, and you know that those things happen. And you just got to be really mindful of these things. And mindful of these decisions, a lot of people run into them don’t even think about it. They just jump into a co-signer situation. Or what about this? I just co-sign for your $100,000 truck, and my dream house just comes up.
Jackie Critzer 3:43
Oh, boy.
Scott Cardani 3:44
That hurt me?
Jackie Critzer 3:45
Well, likely your mortgage lenders gonna see that you just co-signed and it doesn’t matter that your co-signed it matters that you are on the loan for that $100,000. And so that’s gonna go against your loan ratio, your loan to income ratio, and all the other fun numbers that they look at. So that’s an important consideration it does eat up your credit worthiness to some degree. I mean, I’m not sure who would be co-signing $100,000 vehicle but in our situation you know, we do have parents right who co-sign student loans, Now I did have a mom she she co-sign on some of my student loans with me. Boy OH boy if there if she was getting a phone call, you better know that I was on the internet trying to do whatever I could do to take care of those payments. I didn’t let those go because I knew what was happening. But she took a risk on me as many parents do lots of parents do for student loans for credit cards. You know, sometimes you’ve got a co-spender on a credit card little different. lot different. Then you’ve got the parents who want to co-sign on a vehicle. What is the better option?
Scott Cardani 4:50
Yeah, what is the better option?
Jackie Critzer 4:51
Better option? I go to Scott and I say Scott, gosh, you know, I really just need some help with a co-signer and he says I tell you what, I have the money to help you but I’m not going to co-sign with you, I’m going to buy the vehicle and you’re going to pay me now Scott can act as a repossessor. So if I decide I’m going to default on the payments to the bank of Scott, he can come take that car, under the regular rules and regulations under which, you know, most terms allow you to do so. Now, Scott would be wise to have a contract and a purchase agreement and, and all of those things as would as I. Right? I don’t want him to be able to just come take it whenever he feels like it, I want to be mindful that I’m paying towards hopefully a purchase, I am buying it from him, not just borrowing it from him or renting it from him. So there are ways to help the ones you love. And sometimes doing it that way is a little bit better. But sometimes you can’t sometimes just can’t outright purchase it.
Scott Cardani 5:43
Yeah.
Jackie Critzer 5:44
And your only option is to co-sign or for them to find something less expensive.
Scott Cardani 5:50
So let me ask you this. If I’m your cosigner, and your life takes a turn and you go to Critzer Cardani get bankruptcy help, because that would probably be one of the best place to go.
Jackie Critzer 6:01
For sure.
Scott Cardani 6:01
And so you go in there and they help you with your bankruptcy. What’s up with my co-signing into my $100,000 truck?
Jackie Critzer 6:09
Well, you’re you’re not impacted by the bankruptcy at all, which is really great. However, you are now 100 person like you you’re it. You still have the obligation to pay to pay the debt.
Scott Cardani 6:19
With no truck?
Jackie Critzer 6:20
With no truck.
Scott Cardani 6:23
Just think about that for a minute, folks, just as seriously, let that sink in for a second. All of a sudden you become 100% liable. And with nothing in your hand.
Jackie Critzer 6:33
But you kind of raise two separate issues in this in one question. Bankruptcy, okay, I maybe I can file bankruptcy and keep the car and keep making the payments, my bankruptcy is not going to impact you might that car being on my credit in my bankruptcy is not going to impact you. What will impact you is if I stopped making payments, right? Then you’re gonna see the 30, 60, 90, 120 day lates on your credit. And also if the vehicle is repossessed by the lender, and now my car is gone, that $100,000 truck is gone. I still owe them money. And Scott still owes the money even when there’s no vehicle to show for it. Now they have to sell it at auction and they have to mitigate their losses. And that’s sort of a separate situation, but we still owe whatever they didn’t recover. Dischargeable in bankruptcy also again, totally separate topic. So bankruptcy can have an impact here and can help you get out of the problems that are caused when a vehicle is repossessed. But if we walked down that path, my bankruptcy because that vehicle got repossessed does not get rid of Scott’s debt. Even if I bankrupt it, he still has to pay.
Scott Cardani 7:44
So I might be somebody coming to you to say hey, I got this situation where I cosign for Willy, Wonda, Jimmy and Frankie, my kids and they all defaulted. I need to be in bankruptcy. Will, that help me?
Jackie Critzer 7:55
Well, you can bankrupt your co signing obligations, for sure. But most of the time, when you’re a co-signer, you have good credit standing. You have good income, you have assets that you can’t protect, sometimes in a bankruptcy. And so sometimes that’s really not an option for the co-signer just because of their financial wherewithal. Sometimes they don’t, they’re not very credit worthy. They just needed two signers instead of one so they could go after both people. But when you are asked to be a co-signer, you really need to consider all of the facts, you need to consider that it makes you a co-obligor just the same as the person who’s getting in the car and you have no benefit. And and if they skip a payment it dings your credit just like it dings their credit. And if the car’s repossessed, you still have to pay for it.
Scott Cardani 8:45
All right, folks, I hope you enjoyed today’s topic. We’ll see you soon.
Jackie Critzer 8:49
Like and Subscribe.
What To Do When… Outro 08:50
We hope you’ve enjoyed this episode of What To Do When… For more episodes, be sure to subscribe to our podcast and we encourage you to check archives to listen to previous topics. Tune in next week for a new episode and some fresh perspective from Critzer Cardani.
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We look forward to helping you in this venture and Good Luck!
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