Default on car loan?

My boyfriend has two adult daughters. Six or seven years ago, he co-signed on car loans for both of them. Within the space of a year, they both lost their jobs, and defaulted on the loans. The cars were re-possessed and sold. Even though the cars were re-possessed and sold, the creditors keep coming after my boyfriend for the total amounts of the loans. He paid them $3000, which was all that he could handle at the time, but they keep coming after him. His credit rating is totally ruined. Now he's talking about filing for bankruptcy to get the debts erased. Does this make any sense? How can they keep coming back to him for the total amount when they took the cars back? Is this legal?

Question for SPIFIMAN: Does this mean that the default will automatically disappear from his credit record after 7 years, even if he never pays it? Will the creditors stop bugging him at that point?

Auto finance is what I do for a living and yes it's legal.

Your boyfriend is responsible for not only paying the entire balance due left after the auction of the vehicles but also any fees for towing, storage, repossession, auction, reconditioning, interest, lawyers and anything else the creditor can think of.

This can amount to several thousand dollars and if he does not pay they can take him to court and get a judgment, at that point they can attach bank accounts, garnish wages ( if your State allows it) and file liens on any other property he may own like cars, boats, land and homes.

All of this activity will show on his credit for the next 7-years making it very hard to get any other types of loans without making massive down payments, paying huge fees and State maximum interest rates.

I have posted a link in the source box where you can take a test for bankruptcy, it will tell you if he qualifies and if so for what chapter.

Good luck.

Additional details.

Based on the information provided you need to go to the link I posted and look up the statute of limitations for your State, there is a very good possibility that it has expired and if so while your boyfriend legally still owes the debt there is nothing that the creditor can do. They can still take him to court but all he has to do is show that the S.O.L. has expired and the case will be dismissed.

Remember the S.O.L. started all over again when he paid them that $3,000.00.

As far as showing on his credit, the accounts will show for 7-years from the date of first deliquency which works out to 7-years and 180-days.

I thought they could only come after the owner for what was owed after the cars were sold. Say the amount owed was $12,000 before they were sold and they were able to make $8,000 on the cars, your boyfriend would owe $4000 plus I'm sure a lot of fees that they tack on for the default. There should be someone he can call.

Let's start with the last question....

Yes, it is legal for a creditor to collect on a valid debt. Now, let's also look at some details on the assumption that this debt is valid.

When the vehicles were repossessed and sold, an accounting statement of the remaining balance should have been sent to your boyfriend. This statement would have included the amount the vehicle was sold for, any fees associated with the repossession, and the final amount due to resolve this debt. If your boyfriend is not in possession of this statement, he should request it from the original creditor.

Now, you stated that the vehicles were originally purchased six to seven years ago. Let's assume that it was six. You also state that the contracts were defaulted on within the first year, and the vehicles repossessed. That would put us at about five years ago for the last payment applied to these contracts, at the time of sale of the vehicle. You also state that your boyfriend made payments to the creditors totaling about $3000. Based on when this payment was made, and what state you are in, there is a good chance that your boyfriend is no longer within the statute of limitations for litigation on the contract. Which means, yes... he does still owe this money as the contract is in default, but the creditor can not legally obtain a judgment against him for this debt.

My suggestion would be that your boyfriend check out the dates and details of what happened. First, verify that he is "safe" from legal action. Also, knowing those dates will tell him when he can expect the derogatory notations to fall off of his credit bureau reports.

As to the filing of bankruptcy, he should put that on hold if he can. If the debt is out of stats, then he can just play the waiting game and let the accounts come off his credit. If they aren't, then bankruptcy might be a good course to follow to keep from having them take the steps mentioned by one of the other posters.

Ultimately, it is all going to boil down to when the last monies were applied to the contracts. And, to address your question regarding their dunning him for the entire amount... No, they have to credit the accounts with the amount that the vehicles were sold for. They also can not just add any fees they like to the account, there are laws governing costs associated with repossessions and they have to adhere to those guidelines. Get the breakdown from the creditor and go from there.