Legal Question in Credit and Debt Law in Pennsylvania
Default on co-signed loan
I co-signed a loan about 3 years ago. I assumed loan was being paid as I was never notified otherwise. I just received notification from my personal credit card holder my credit limit was reduced to amount presently owed, and interest rates would increase from 13% to up to 26% for an unfavorable credit report. Do I have cause to sue holder of loan for ruining my credit rating without ever notifying me loan was due, past due, or not paid? I was NEVER contacted by loan issuer. If not, what are my options?
1 Answer from Attorneys
Re: Default on co-signed loan
Attorneys have one piece of advice regarding co-signing loans. Don't do it unless you 1) are prepared to pay the note yourself and 2) you can completely trust the other party. Co-signing is a misnomer. When a person co-signs they are completely responsible for the debt. The other party has already been determined to be unsuitable for credit and therefore the creditor required that someone elese, the cos-signor, guaranty the debt.
In the credit instrument it will explain that the co-signor is responsible for payment even though the creditor does not contact that person at all.
You should either speak with an attorney or negotiate and arrange to pay the debt with the creditor, rather than any collection agency. The creditor may be willing and able to completely remove the mark from your credit report.
As to the credit card interest rate. Some banks are just not worth doing business with. My advice would be to decide if you want to do business with an institution that treats its customers so shabbily. Pay off that debt and if you still need a credit card get another vendor.
Regards,
Roger Traversa
email: [email protected]
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