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We hope the articles below help you understand your rights as a consumer. You can scroll through the titles, or sort by Practice Area or Topic. You can also use the search feature to locate information by keyword.

Flitter Milz represents people with a variety of problems involving consumer credit and collections. If you have a particular question or believe your consumer rights have been violated, Contact Us for a no cost consultation.

Responsibilities of a Co-Signer

Sometimes a friend or relative with poor credit may ask you to co-sign on their car loan. It’s important to know that co-signers take on financial responsibilities for the duration of the loan. Co-signing does not just mean that you are a character reference for the borrower. Before you sign, keep the following in mind.

Get Familiar with the Account

Before you sign, make sure you know what you are agreeing to. Know the purpose of the account, the type of account, the terms, and why your friend or relative needs a co-signer.

If you co-sign, establish access to the account so that you can verify that payments are made on time and as agreed each month.

Understand Your Legal and Financial Obligations

Read and understand the credit contract. Be aware that a lender may be able to collect from you even when there is collateral. In the case of a car loan, for example, the lender might demand payment from you instead of repossessing the car. Sometimes, even if the car is repossessed, its value may not be sufficient to pay off the loan.

Understand that if the primary borrower defaults and has missed a payment, the lender can demand payment from you.  As well, the lender, or a debt collector, may try to collect from you.  The debt may include the principal amount, plus interest, late fees or collection costs. 

Monitor the Payment History

Get access to monthly statements, either online or through customer service, so that you can see when payments were applied to the account. Make certain the lender applied the payment properly, with specific amounts to principal and interest.

Don’t wait until a collector calls saying payments have not been made. By that time, your credit may already have been negatively impacted. Remember, one missed or late payment could mean a black mark on your credit.

Check Your Credit Reports

Check your credit reports regularly with Transunion, Experian, and Equifax to see how this loan is being reported. If there are late payments, address the problem with the co-borrower. If the reporting is inaccurate, send written disputes to the credit bureaus.

Prepare for the Worst

Create an account where you make the monthly payment. If the co-borrower misses or stops making payments on the loan, you’ll have funds readily available to cover the missed payment and keep your good credit name.

Seek Legal Advice

Flitter Milz is a Consumer Protection law firm that represents consumers involved with matters concerning wrongful vehicle repossession and credit reporting errors.  Contact us for a no cost consultation.

What Happens if I Default on my Car Loan?

An unexpected occurrence like illness or loss of employment can leave you struggling to pay bills on time. If you are unable to pay your car loan on time, the lender may choose to repossess your vehicle. However, the lender must handle the repossession properly – whether you have fallen behind or not.   

Seek a Deferment Before Default 

Contact your lender before you default to see if a deferment is possible. A deferment will postpone your payments while you catch up with finances. These postponed payments are then applied to the end of the loan.

It is important to receive written confirmation from the lender showing this change to the original loan agreement. Since the terms of the loan have, in effect, been extended, the consumer needs to see how the lender has calculated any additional money to be paid at the end to satisfy the loan.

A deferment will likely still appear on your credit report, but the effect on your credit will not be as negative as a default.

Prepare for Repossession

If your loan is in default, understand that the lender has the right to repossess your vehicle. If you think a repossession is coming:

  • Remove all important car vehicle purchase and loan documents from your vehicle
  • Remove all personal items.
  • Note the current odometer reading 
  • Take photographs of the vehicle – interior and exterior.
  • Request that the lender provide you with a written loan payment history and a payoff figure.

Get Your Vehicle Back

The loan agreement that you sign at the time of purchase details your rights if the vehicle is repossessed. If you financed through the dealership, this document is called the Retail Installment Sales Contract or RISC. It will state whether you must pay off the full balance of the loan, pay only past due payments, and pay for towing and storage fees.

After the repossession, you are entitled to receive a notice that details the terms for you to get your car back. This notice may be called a Notice of Intent to Sell Property. You should receive this notice before the vehicle is sold.  Once the vehicle is sold, the lender is to send a Deficiency Letter which confirms the selling price of the vehicle and any remaining balance owed on the loan.

Seek Legal Assistance

If your vehicle has been repossessed within the past six years, whether you fell behind on payments or not, you may have a case to pursue against the lender for wrongfully repossessing your car, truck, boat, motorcycle or RV. Contact Flitter Milz for a no-cost consultation.

Any Change to the Terms of your Auto Loan must be in writing

Many times a job loss, illness, death in the family or divorce cause a hardship making it difficult to keep up with financial obligations. When a borrower defaults on auto loan terms, such as late or partial payments, a lapse in insurance coverage, or death of borrower, the lender may choose to repossess the vehicle.

The loan agreement signed at the time of purchase, or Retail Installment Sales Contract, details the lender’s rights if you default on the terms of the loan, and your rights if the vehicle is repossessed.

Lending money for an auto loan gives the bank or credit union a security interest in the vehicle.  If the loan terms are not met, the vehicle can be repossessed from the borrower.  The lender may demand full payment of the loan, payment of only past due payments, and payment of repossession charges and storage fees.

The lender and borrower may discuss alternative payment options, such as deferred payments. If any changes are made to the terms of a signed loan agreement, the borrower must get those terms in writing from the lender.  For example, if payments have been added to the end of the loan, the lender must show the calculation of any additional funds required to satisfy the loan.

Never rely on a verbal agreement. Any changes to the original terms of an agreement should be in writing.  

Seek Legal Assistance

Whether you have fallen behind on your auto loan payments or not, if your vehicle has been repossessed in the past six years, Flitter Milz will evaluate the repossession for potential violation of your consumer rights. Contact Us for a no cost legal evaluation.

Is Your Vehicle at Risk of Repossession?

Your hours may have been reduced at work.  A family member may be seriously ill.  You may be going through a divorce.  Any number of life situations may impact your ability to keep up with your car payments.

If you believe that your vehicle may be at risk of repossession, follow these steps:

1) Gather Important Documents 

Remove all car purchase and loan documents from your vehicle immediately. Keep these documents in a safe place in your home, not in your car. In most cases, auto lenders are not required to contact you in advance of a repossession. If your car is repossessed, gather all car purchase and finance documents for a qualified consumer protection attorney to review.

2) Request a Loan Payment History from the Lender

Contact the lender for a complete Loan Payment History which reflects all payments from the date the vehicle was purchased to the present.

If the payment history does not agree with your records, you may dispute the errors with the lender. If you defaulted on your payments, the payment history will show late fees, interest, or other charges added to your account. Be sure that the lender’s calculations are correct.  If any payments were not recorded properly or were misapplied, send a written dispute to the lender with documents that support your dispute.

3) Photograph the Condition of Your Car

Take photos that show the current condition of your vehicle, including the interior, exterior and odometer reading.

4) Do Not Hide Your Vehicle

It is illegal to hide your vehicle if the lender is attempting repossession. Review your signed loan agreement for the terms of your loan.

5) Secure Any Agreement to Defer or Avoid Repossession In Writing

If you have an understanding with the lender to permit you to catch up on payments or defer a repossession, be sure to get that agreement in writing. Whether you get a letter from the lender, have an exchange of emails, or send your own letter detailing the terms, it is important to create a document which confirms the agreement.

6) Seek Legal Help

Contact Flitter Milz for a free evaluation of your case.  Whether you have fallen behind on payments or not, the lender must follow the law.

Co-signing a Loan: All Risk, Little Reward

Co-signers lend their names and good credit histories to the primary borrower, usually when the other borrower cannot obtain credit on his or her own.  For example, a parent may co-sign for a child who does not yet have a credit history. Or, someone may be asked to co-sign by a friend or relative whose credit is tarnished, has negative marks in their credit history, or a low credit score.

Co-signing a loan does not mean that you are serving as a character reference for someone else. Here’s what you should know before you co-sign a loan.

You’re Liable

When you agree to co-sign on a loan, you are liable for payment of the loan. You risk having to repay any missed payments immediately, or having to pay the full loan balance if your co-borrower defaults.

If the co-borrower defaults on the loan, the lender can use the same collection methods against the co-signer, such as demanding repayment of the entire loan, filing a lawsuit, and garnishing bank accounts after a judgment.

Credit scores may be impacted negatively by any late payments or defaults by either co-borrower. If the primary borrower dies, loses a job, goes through divorce, files bankruptcy, or otherwise fails to make payments, all responsibility for meeting the terms of the account generally transfers to the co-signer.

In some cases, the person who thought they were merely a co-borrower or guarantor was really listed in auto finance documents as the primary borrower. Be aware that if your co-borrower is primarily irresponsible for timely monthly payments, your credit score could suffer if he or she pays late, even if the lender did not give you a timely notification of the missed payment.

You Could Be Sued if Payments Aren’t Made

Failure to pay on the loan (or another breach of the loan agreement, like not keeping up the car insurance) means the lender can come after you for the entire balance. The co-signer often gets sued first because their credit is stronger and the bank believes they’re more likely to repay the debt.

It’s Difficult to Remove Your Name from the Loan

Once the account is opened, it’s very tough to remove a co-signer from the loan. We often hear stories of car buyers being told by the salesman to return after four to six months, at which time the dealer will supposedly remove one of the borrowers from the paperwork. This is not true, but rather a tactic to sell cars. Both the primary borrower and co-signer need to satisfy the loan in order to terminate the loan agreement, or obtain the lender’s express permission to remove one of two co-borrowers.

Tax Consequences of Settled or Unpaid Debt

The lender might not want to go through the trouble of suing you, so they agree to settle a post-repo deficiency balance for less than the balance owed. This means that you could have tax liability for the difference.

For example, if you owe $10,000 and settle for $4,000, you may have to report the remaining $6,000 as “debt forgiveness income” on your tax returns and pay tax on it. Settling on the account for less than the full sum may also leave a negative mark on your credit report. You may need to seek professional tax advice on this.

Co-signing Could Make it More Difficult for You to Get a Loan

Before you co-sign for someone, think about whether or not you’ll need to use your credit for your own needs. A lender may deny a credit application if there is too much credit in your name or the balances are too high relative to your income.

Seek Legal Advice

Flitter Milz is a nationally recognized consumer protection law firm representing people in matters against lenders, debt collectors and the credit bureaus.  Whether you or the co-borrower has fallen behind on payments or not, Contact Us for a FREE evaluation of whether your consumer rights have been violated.

Understanding the Process of Auto Repossession

Life circumstances, such as job loss, divorce, health issues and death, can make it difficult, or nearly impossible, to keep up with financial obligations. Once we fall behind, it’s difficult to catch up.  Then collectors begin to call, vehicles get repossessed, and our credit reports are impacted.

When borrowers fall behind on car loans, there may be options to discuss with the auto lender, such as deferring payments for a few months and having those payments placed at the end of the loan.  Regardless, it would be beneficial to address late payments with your lender and discuss available options.  If you have fallen behind, the lender may choose to repossess the vehicle.

Car repossession laws vary from state to state. Lenders may have the right to repossess a vehicle as soon as the borrower misses a payment, fails to maintain adequate insurance, or defaults in another way expressed by the contract. Lenders usually do not have to warn you that they are planning to repossess your vehicle.

A repossession company is permitted to come to your property. However, they cannot breach the peace, damage your property or vehicle, use violence, break into a locked garage or fenced area, or repossess your vehicle based on faulty information.

Most states require the lender to tell you what it plans to do with the vehicle and any rights you have. This information usually comes in the form of a letter, called a Repossession Notice, promptly after the repossession occurs. It will detail where you car was taken and inform you of when to collect any personal property left in the vehicle. The repossession notice will state when your vehicle may be sold and if the sale will take place at an auction or private sale.

After a repossession, the lender will offer you the option to redeem your vehicle by either paying the past due payments and repossession fees, or paying off the entire balance of the loan.

If you are unable to make the required payment to redeem your vehicle, the lender will it. Although they are required to get the best price possible, in most cases, the sale amount will be less than the outstanding balance owed on the loan. This situation often results in a “deficient balance” that you will be responsible to pay to your lender. The lender may choose to sue the borrower for the deficient balance.

Most lenders will report auto repossessions to the credit bureaus, whether the repossession was voluntary or involuntary. The listing can appear on your credit reports for up to 7 1/2 years.

Seek Legal Help

For more information on laws protecting borrowers from wrongfully repossessed vehicles, Click here.

Flitter Milz is a consumer protection law firm that represents borrowers that have had a car, truck, motorcycle, boat or RV repossessed within the past six years.  We will provide a FREE consultation and evaluate whether your consumer rights have been violated. Contact Us today.