Dear Bankruptcy Adviser,
How can I get a vehicle loan out of my name? I can’t get anyone to refinance it, and my ex-boyfriend is not paying. Is bankruptcy my only option?
— Anna

Dear Anna,
While I make a living by handling bankruptcy cases, I hope you can find an alternative for your previous error in judgment, especially if this is your only debt. Co-signing on a loan is one of the most common reasons people file bankruptcy. You did sign the contract; you did agree to pay it; and you are now paying the price.

The lender will not take your name off the loan simply because you and your boyfriend are no longer together. Just as the lender has no say in your dating choices, it also has no say in your decision to split up. It does, however, have your signature agreeing to pay the balance on this loan. Finally, it has no incentive to let you out of that agreement until paid in full.

You have four options at this point:

  • Pay the balance: Hopefully, you can use the car while paying the balance and can afford the payment. This option protects your credit and eventually gets you the title to the vehicle.
  • Find someone else to pay the balance: You could ask a friend to pay the balance and also drive the car. You are still 100 percent liable to pay off the car, but hopefully you can get someone else to help. Maybe a friend can make a percentage of the payment and you can pay the difference. Make sure all drivers have appropriate insurance. Don’t let someone drive the car without being fully insured to do so.
  • Return the car to the lender: This will be considered a repossession on your credit report. The lender will sell the car and send you a bill for the remaining balance after the sale, called a deficiency balance. You will have to pay that balance.
  • Ignore the problem: The lender will still repossess the car and come after you for the deficiency balance.

I have heard clients say they were going to sue the other party responsible and make them pay. This sounds good in theory, but getting the other party to pay is very difficult. If you figure out how to do this, you can start your own co-signer collection business because that would be very impressive, indeed.

Good luck!

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