Dear Mary: About 10 years ago my daughter co-signed a car loan for a friend. The “friend” skipped the payments and left town, so they came after my daughter for the payment.
All these years later, she still hasn’t paid anything on the loan. Is there a time limit for how long they can come after her to pay? Is there anything she can do to get out of this problem? We live in North Carolina. Thank you. – Jeanie
Dear Jeanie: I am not a lawyer, so I cannot offer any kind of legal advice. That being said, my understanding is that in North Carolina, debt secured by a promissory note (like a car loan) does not have a statute of limitations per se. Once the lender files a complaint and receives a judgment against the borrower (your daughter) for non-payment, the lender has 10 years from that date to try to collect. Then the debt can be reported to the credit bureaus for up to seven years after being “written off” as bad, which is only slightly better than “bankruptcy” on the bad things list on your credit report.
Your girl should go to AnnualCreditReport.com to order his three credit reports, one each from Experian, EquiFax and TransUnion. She is entitled to a free report from each office every 12 months. If a judgment has been filed against her, the reports will show those details, including a date the judgment was filed.
It is a terrible tragedy, and I am so sorry that she went through this ordeal.
Now, even if you haven’t asked for it, I’m going to give you, your daughter and everyone reading this my standard lecture on co-signing for a loan. Do not do that. Never, ever, and I mean under no circumstances.
If someone (child, parent, brother, sister, cousin, aunt, uncle, employer, employee, friend or foe) cannot get a loan on their own, it means the bank considers that person to be too risky. So why the hell would you, a person with limited resources, step in and agree to take a level of risk that even a big bank wouldn’t take? You should not. Never, ever, what I think I just said, but I have to keep saying it.
Every time you co-sign a loan by adding your signature to the promissory note, you are entering into a legal contract promising the lender that if the borrower defaults, you will gladly repay the loan on their behalf, regardless of the amount. is, how high the interest rate, how unreasonable the terms and conditions could be, or how long it takes to pay it off in full.
If you really want to help and believe in this person’s ability to pay off a loan, great. Do it. But instead of co-signing a loan, you become the lender. You hear me. Put it back now, write a repayment agreement, and avoid all that hassle later.
What? Can’t you afford to do this? You also cannot afford to co-sign.
So, are we clear on this? Never, ever co-sign on a loan. Listen?
Marie invites you to visit her at Every dayCheapskate.com, where this column is archived with links and resources for all recommended products and services. Mary invites questions and comments to https://www.everydaycheapskate.com/contact/, “Ask Marie.” Tips may be subject to tips.everydaycheapskate.com/. This column will answer questions of general interest, but letters cannot be answered individually. Mary Hunt is the founder of Every dayCheapskate.com, a blog on frugal living and the author of the book “Debt-Proof Living”.
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