Legal Question in Credit and Debt Law in North Carolina

Re: Co-signed loan for son and now he isn't paying

Here is how to accomplish what you want to do.

In order to obtain possession of the car and require him to sign the title, you should be able to bring an action in small claims court. You should do this in the county where the car is located. Legal Aid has an excellent publication called "Guide to Small Claims Court" available on their web site at this address: http://www.legalaidnc.org/publications/Small_Claims_Court/default.htm This pamphlet should answer most of your basic questions and make you feel more comfortable about the process.

You don't mention if your son lives with you or not. If he lives with you, taking him off of your insurance may not do you any good. The insurance company may not legally be able to "exclude" him from your policy. You need to call your insurance agent to determine if this is the right thing for you to do. If your son does not live with you, he probably should not be on your policy.

I assume that the car has full coverage for collision and comprehensive coverage because there is a loan on it. It is very important for you to keep the car insured for collision, theft, etc. until the loan is paid off. The initial consequence of going without insurance, for you, will be the potential loss of the car without any way to recover its value if it is stolen, or pay for the repairs if it is wrecked.

If your son drives without liability insurance, the title is in his name and he does not live with you, you may not have any negative consequences, but you could. If you know, or have reason to believe, that he is a reckless or incompetent driver, or if you know he often drives while impaired, "in theory", you could be held liable for "negligent entrustment" even though your name is not on the title. Cosigning that loan enabled him to have a car to drive. Under a "negligent entrustment" theory, you could theoretically be held liable to pay for any damages your son causes while driving the car, including property damages and personal injury. Your fact situation is not a "typical" case. A clever attorney could make out arguments both to try and hold you responsible, as well as to protect you and argue that you are not legally responsible for his conduct.

I recommend that you speak to your insurance agent and speak to a lawyer in your area of the state before proceeding further. You can file a small claims action without a lawyer, but obtaining a lawyer's advice on how to word your complaint and what factors really matter in these situations, is well worth the price of any initial consultation fee you might have to pay.