Legal Question in Credit and Debt Law in North Carolina

Unfortunately, you cannot force the lender to take her name off and put his name on. She needs to do what she can to preserve her credit by making the payments on the loan. She can try and get a judgment against him, but he is probably judgment proof and she most likely won't ever collect anything.

I have to agree with Attorney Coleman. Your daughter was foolish for doing this. While it will not help out your daughter, perhaps others who are thinking about this and see your story will think before they act. NEVER co-sign or agree to liability for something for someone else. What your daughter in effect said to the lender was "go ahead and make the loan because if boyfriend does not pay, then I will." Co-signing is a red flag - it means that the person who needs a co-signer has either no credit or more likely poor credit. And in the latter case, it also means that the borrower has a string of defaults and that he/she will likely default on the current loan before moving on to the next victim.

I don't know how the boyfriend was able to sell the bike as he did not have title to it, but if it was for parts, then it may not have been an issue. However, the lender is going to take a dim view to learn that the loan is no longer secured. It is a crime to defeat a security interest this way by disposing of the bike.

If I were your daughter, I would try to get the loan paid off as quickly as possible if she wants to protect her credit. The limits for small claims court in NC is $5,000. Once the loan is paid off by your daughter, then she can sue the boyfriend, although, as noted by Attorney Coleman, the judgment probably will be uncollectible. There is no wage garnishment in NC and the boyfriend might smart enough not to own anything in his name or maintain a bank account. Still a judgment has value. It remains on the judgment rolls forever. It can be enforced for a 10 year period and renewed for another 10 years. It will be listed on the boyfriend's credit report and it will make it impossible for him to get a mortgage unless he satisfies the judgment. It will also be difficult for him to rent an apartment or get other credit.

What I would do is have your daughter pay off the loan and then try small claims on her own to limit her out of pocket expenses.