Dear Bankruptcy Adviser,
I have co-signed for a car loan and now he is making payments late and messing up my credit. Can I repossess the car? Can he repo it back? What can I do to physically access the car?
— Caren Carless

Dear Caren,
The first thing you have to understand is this: As the co-signer, you are on the hook for this debt until it is paid in full. At risk are your credit score, your available cash and the relationship you have with your delinquent co-signer. You are in a position where all three could suffer.

You also need to give up the idea of repossessing the car on your own. Making efforts to cure a default on a loan without aid of legal proceedings, aka “self-help,” aka “taking matters into your own hands,” is not considered a legitimate substitute to legal action in most states. The courts have this rule because they want to discourage the kind of physical confrontation that’s possible when you attempt to repossess your friend’s car. So let the dealer or the bank repossess the car.

You might not come out of this squeaky clean, Caren, but you might be able to minimize the damage if you choose wisely:

Choice 1: Wait and do nothing: Your delinquent friend continues to pay late or not to pay. Your credit will drop, the car will be repossessed and sold by the bank and you will likely be sued for the balance owed.

Choice 2: Surrender: Assuming that your friend is delinquent, you can notify the dealer, have the dealer pick up the car and voluntarily surrender it to the bank. You will have a repossession on your credit report and you will be liable for the remaining balance.

Choice 3: Make the payments yourself: Demand that he turn over ownership of the car and you make the remaining payments. When the car is paid in full you can sell it and recover some of your money.

Choice 4: Stay one payment ahead: Call the car company, find out what amount is delinquent (if any) and pay it. Then make one additional payment. Then, even if your co-signer pays late again, any late payments the he makes will still count toward the balance without hurting your credit. You just need to keep in touch with the car company and always stay one month ahead.

Caren, I think choice No. 4 is the best option right now because what you want, I think, is for your co-signer to continue paying as much as he’s able for as long as he’s able. If he stops paying, I would go with No. 3.

It might seem like you can sue your friend to recover some damages at some point in this process, but if your friend failed to pay the car dealer then it is unlikely he would pay you. As well, even if you get a judgment against your friend you’d have to know how to enforce it.

So my advice is to go with No. 4 and try to maintain your friendship as best you can. Friends are precious and there are always bumps in the road of life. Don’t let this one derail you (if you can). Regardless, in the future, don’t co-sign anything for anyone unless it’s absolutely necessary and you’ve eliminated all other options.

Justin Harelik is a practicing bankruptcy lawyer of counsel to Price Law Group in Los Angeles. To ask a question of the Bankruptcy Adviser go to the “Ask the Experts” page, and select “bankruptcy” as the topic.