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Experience Considerable experience in the area consisting of 25 years in both consumer and commercial finance and business management, including 15 years specializing in international Mergers and Acquisitions with over $100 billion in assets acquired
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Wharton post grad in finance
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Expert: Finance Guy Date: 4/30/2008 Subject: Co-signing
Question My son co-signed for a roommate for a loan to finance a motorcycle. He knows the roommate is late on the payments what can he do to protect himself and his credit. He has excellent credit. Should the roommate deliver the cycle voluntarily and make arrangments to pay the amount he is behind, would this help? What options are available to him. We as his parents know he should not have done it, but what can we do, everyone knows how kids are.
Answer This is something my son would do, just that perfect combination of naivete and good heartedness...
You are thinking about this correctly.
Have the individual surrender the motorcycle to you immediately.
Give him a grace period to get the payments caught up, maybe 60 days.
This should not be all summer, obviously, as when summer goes, so will his incentive to make payments on a bike he can't use.
Set up a payment schedule so that he is paid ahead by winter, hopefully through all the winter months, but I realize that this may not be possible.
If during the grace period (unless you have already), determined that he will not be willing or able to honor his financial obligations, then
repossess the bike, sell it for what ever you can and get him to sign an agreement that he is responsible for the balance of the payments.
By the way, where is this young man's parents?
Have you approached them to help make good on the debt?
Good luck to you.
My heart goes out to you and your son.
This may be a lesson (expensive, unfortunately)that may actually save him many more thousands in more costly errors in judgment in the future.
Alas, we cannot trust everyone to do the right thing.
However, I also hope that this does not prevent him from ever trusting anyone again in the future.
