Debt question

SkyHog

SkyHog

Touchdown! Greaser!
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Feb 23, 2005
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Castle Rock, CO
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Everything Offends Me
This is not for me, but a family member.

Here's the facts:

1. A car, we will call it Mazda 3, was bought by 18 year old kid with father as cosigner
2. A different car, we will call it Toyota, was bought by the mother with father as cosigner
3. Both loans are done through the same bank
4. Mother and father split and get legally divorced
5. Son defaults on car loan for the Mazda 3. Father is nowhere to be found

In this scenario, can the bank apply the balance of the loan from the Mazda 3 to the loan for the Toyota? That is what the bank is trying to do, and it seems wrong to me. The mother retained possession of the Toyota and has paid diligently toward it.
 
Wow. Fascinating. I have no idea but I will make the assumption that the mother and father held joint accounts at the bank at step 1, and the divorce decree would have split the ownership of those accounts at step 4, so any signatures using assets at step 1 as collateral would become void at step 4?

Problem is father co-signing at step 1 may have legally been considered "jointly" signed by father and mother.

Definitely hope a real attorney can sort that mess out. Wow.
 
Where is the Mazda 3?

The bank should be repossessing that.
 
Mom needs to find a good lawyer familiar with the laws of the State, or States if the Bank and the former homestead are in different states. I don't see how the mother can be held responsible for a loan that she didn't sign for... but I know nothing about community property laws and how it would work in this convoluted situation.

Good luck with this!

-Skip
 
The divorce court can't disrupt the debtor/creditor relationship. It would come down to the security and guarantees on the loans. If the divorce decree says the father was responsible for the debt, and wife has to pay it, she should be able to hold him in contempt and collect in the divorce action.
 
It is in New Mexico.

Also, some answers to questions posed so far:

1. The Mazda 3 is going to be repossessed and sold. It is trashed, so unlikely to return much money to the bank, and the difference is what will ultimately be applied to the loan on the toyota.
2. The common denominator between the two loans is the father. He is a signer on both loans, and following the divorce, the state said thst joint loans would remain joint unless bought out by the other party.

To take it further, the bank is also refusing to accept payment toward the Toyota, they are inviting that payment be made on the Mazda 3 first. This would essentially force her into defaulting on the Toyota loan as well. I think that is solvable by mailing checks with the specific account number indicated.
 
Wow, no clue, but sounds like a mess. Reason #27 to never co-sign on a loan!
 
SkyHog said:
...following the divorce, the state said thst joint loans would remain joint unless bought out by the other party.
Click to expand...

Ouch. That's a big mistake on the part of the divorce attorney. If there was one.
 
Enter the Toyota in a demolition derby, and take the winnings as a down payment on a new car.
 
denverpilot said:
Ouch. That's a big mistake on the part of the divorce attorney. If there was one.
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Nope - no attorney. As much as I usually recommend avoiding attorneys when things can be otherwise handled easily enough, there were some extenuating circumstances in this case to where I recommended a divorce attorney, but my advice was not taken.

Think "father" cheating on mother, but with the son's girlfriend that was living in the home. Yeah. Can't make that kinda stuff up.
 
Subsea said:
Enter the Toyota in a demolition derby, and take the winnings as a down payment on a new car.
Click to expand...
Jokes aside, that's not a bad idea. Perhaps I can convince her to let me drive it in the fair here in July...I'll be running my dwarf car in a real race, but I always wanted to try demo at least once.
 
Go drop both cars off at the bank and let them repo both. Go buy another car before the credit gets ALL JACKED UP...
Don't ever help the kid with anything since he can't pay his bills and stuck the parents.
 
pigpenracing said:
Go drop both cars off at the bank and let them repo both. Go buy another car before the credit gets ALL JACKED UP...
Click to expand...
Interesting point - since her name is not on the loan that defaulted, theoretically, she could do that now. I wonder what would happen if she traded in her current car at the time, so that they don't have the chance to attach the balance from the other loan...

even if she went slightly upside down in doing so, it would avoid having both cars in the same loan
 
As others noted, it depends on state law. Usually the bank can't reach through as they're trying to do, but community property laws and resulting obligations may be different. Obviously the bank is attempting to apply pressure by how they want to apply the payments - that is governed by the loan documents and state laws.

A lawyer is needed to sort it out. Obviously the bank has more legal resources, but there may be legal aid folks that can help.

What a mess.
 
I don't think there is any way they can add that balance on the other loan. The loan is a signed contract with the amount that is owed. You can't legally just change that.
 
Depends on two things. State law and what the agreements with the bank say.

Funny how the "no lawyer" folks talk as if the role of an attorney in situations like this is to generate fees by starting a fight :rolleyes:. Not even close in my brief experience ;).
 
all I will offer to Nick is to do what you think is right and avoid the upcoming nuclear implosion and fallout without being dragged into the middle of it.
 
I'd think a written request for debt validation
GlennAB1 said:
I agree. but they could end up with more in legal fees than what the loans come to. And the bank knows that.
Click to expand...

I don't know about anywhere else, but when I lived in The City, there was no shortage of "storefront lawyers" who took cases like this on quite inexpensively -- as in often less than a hundred bucks. My guy rarely charged me more than $50.00 if all that was necessary was a phone call or nastygram.

Basically, either she's responsible because of some state law making spouses responsible for each others' debts, or she isn't. If she isn't, a lawyer can put a quick end to the collections and prevent any damage to her credit with a single nastygram. If she is, then a lawyer may be able to do something about them refusing to accept payments on the Toyota, which doesn't sound kosher to me.

Banks, in my experience, consider themselves above the law until they are forced to comply with it. Lawyers force them to comply with it. I'd definitely consult one in this case. Good credit takes only one bad mark to topple and years to rebuild.

Rich
 
Rich said a lot there.

Creditors will often take a position which is untenable because, honestly speaking, we live in a time when people have become programmed to meekly accept whatever whipping is dealt to them by others in positions of apparent authority or power.

I often find that simply sending an ESAD letter (Eat S*** And Die) fixes the issue, and I rarely charge for such things (and most lawyers wouldn't, or would charge a noiminal sum, notwithstanding the ever-present lawyer-bashing one sees).

Of course, it is possible that the bank is in the right here - but I'd consult, first.
 
Well, I told her to get a lawyer. I suspect she will yet again disregard my advice...
 
Sorry, I didn't catch any of this conversation except about the father cheating on his wife with the son's girlfriend. The rest was just distracting noise.

You'd think there'd be a tv show w/ stuff like this to entertain me.
 
SCCutler said:
I often find that simply sending an ESAD letter (Eat S*** And Die) fixes the issue...
Click to expand...

LOL. I'm so stealing that. I often write my own if a lawyer isn't needed and I know what's up with something. Ha. Now I know how to file them on the computer. ;)
 
denverpilot said:
LOL. I'm so stealing that. I often write my own if a lawyer isn't needed and I know what's up with something. Ha. Now I know how to file them on the computer. ;)
Click to expand...
On the same theme, years ago when all correspondence was paper, I had a special rubber stamp for some incoming letters.

Nice to see they are still available Link to BULLS*** Stamp on Amazon.

Outgoing, once word processing appeared, many of my first drafts read exactly like that.
 
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