Legal Question in Credit and Debt Law in Texas
Car reposession and Insurance Default
Sorry, this has to be a twofold question�first, when a bank states in their contract on a loan that if insurance is not kept up, the option of the bank will be that they can either add insurance into the payment or reposes the vehicle�if they do neither, and the car is totaled out due to accident, would it be true that since the bank did not protect their investment then they, the bank, have no recourse against the vehicle signor(s) due to their own negligence and notification in writing from the insurance company prior? Secondly, if a car is repossessed due to the Major Co-Signor deciding down the road they no longer want to be responsible for the note, and many payments have been made by the Minority Co-signor, and they subsequently force the bank to pick up the vehicle, is the person who has made payments all along (minority co-signor) to be held responsible due to the reneging by the Majority Co-Signor? Thank you for your responses!
1 Answer from Attorneys
Re: Car reposession and Insurance Default
The first is nothing more than wishful thinking. The bank was foolish in not protecting their interests, but that doesn't let the signers off the hook.
As to the second, the withdrawing cosigner may have some liability to the minority cosigner. It all depends upon the facts and circumstances under which the cosigner withdrew and caused the repossession. If what they did was legal, then liability probably will not attach.
Short of bankruptcy, I've never seen a lender let a cosigner off a note.
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