Car totaled, no insurance, can't make payment?

Question

My brother co-signed on a car for our trouble-making youngest brother. Troublemaker totaled the car and refuses to help pay back the loan.

Good brother in bad financial bind at moment, job just cut back on hours, has debt and can't afford the payments. He stopped paying a few months ago, credit rating at 400 now.

Loan is willing to offer new loan at better rate with co-signer. However no one is willing or is not able to assist.

He also recently enlisted in air force and will be shipped off to bootcamp in 6 months.

Really want to avoid bankruptcy, any other options?

Answer 1

Since the good brother is going to be on active duty soon, he can take advantage of the Servicemember's Civil Relief Act when eligible. For all of his loans, creditors are required to cap his interest rate at 6% if his military service impairs his ability to perform on his financial obligations (burden is on creditor to prove that it doesn't if they don't want to cap the interest).

Some of the other provisions may help him out, too. If the auto creditor ends up suing your brother, he can get a temporary stay on the proceedings under the act. (Same goes if his other creditors decide to sue him.) See the link below for more details on these benefits (and others) of the SCRA.

If your good brother ends up paying the note for the "troublemaker", he could consider suing the troublemaker. But then, if he won, he'd have to do a lot of work to collect on the judgment (like file for garnishment of wages and attachment of bank accounts and possibly real property). That may be more trouble than it's worth. But yet the work might be worth it as a showing of "tough love". Definitely get legal advice if you decide to go that route.

I do think, though, that your brother should think long and hard before dismissing bankruptcy as an option. It has several benefits in this situation:

1. A discharge of all his debts, with exceptions (most notably for domestic support, certain taxes, fraudulent debts, fines, willful and malicious injury).
2. No more worries on his part about his co-signer's obligation (it would most likely be discharged). The troublemaker would be left at the creditor's mercy.
3. An easier time re-establishing good credit if his debts are huge and he can't bring them current soon. Once the slate is wiped clean, he can get a secured credit card, which could become unsecured in 1-2 years. Paying that, and other post-bankruptcy obligations on time every time would bring a tremendous boost to his credit score.
4. It's excusable. After all, his hours were cut, unforeseeably, and with a military obligation coming up soon, he'd be between a rock and a hard place trying to find a second job.

Of course, bankruptcy wouldn't be worth it if his military compensation is generous enough to allow him to become current on his debts before they go to collections or to court. Then, with the 6% interest cap, he might have an easier time paying off his debt. Once his debts are paid off, he can rehabilitate his credit by using a small fraction of his available credit and paying the bill on time, every time. (Or he might have to resort to a secured card if his credit card creditors don't want to deal with him anymore.)

I recommend that he keep all of his options open, while carefully analyzing his current and future budget. No one likes to hear that "b" word, but it's the only way that he can determine what is best for him.

Answer 2

1

Answer 3

Yuck!! What a mess!! I feel for ya,dude........

Here's some ideas (it's worth a shot)

*Have him make out a detailed budget and have him take that to the bank and talk to somebody in authority there....together yall might be able to work out a low payment that will work

* sell somethings.....We all have Junk lying around that we really don't need that could go to e-bay or a garage sell

* you and him go to "troublemaker" and have a "frank" talk with him. I am confident if you both go to him (and maybe involve other family members also) he might see the light

*Check out my sources...they might have some other (and better) ideas....

Since your bro co-signed,he is legally and moraly responsible for the debt (some thing I think yall both already know) but the "troublemaker" is also responsible for it......make sure he feels the heat just as much (or more) than the co-signer...
The "troublemaker" needs to sell somethings also.........

Good Luck!!

Answer 4

The good brother needs to send the "hardship" reasons for a new payment plan to the creditor VIA certified letter, but do you honestly think they are going to "buy" the reasons with a 400 credit score?

The creditor is LOOKING for another sucker to co-sign the debt for the good brother because his credit is deteriorating and plain horrible now!

To call the bad brother trouble-making to begin with is silly, because the good brother made trouble for himself when he CO-BOUGHT the car.

Whenever you co-sign -- you have co-bought. And further, when a creditor tells you that the person you are signing for is a bad risk, why discount and dismiss their professional expertise?

Why even allow the opportunity for extra strife and chaos in your life for trifling family members?

He should've told his brother that he can't co-sign the note, but he can drop him off at the local library to read up on how to improve his credit.

Must you be screwed by your own family to realize the bad character habits that people, even in your own family, can have?

Hell, the bad brother didn't even car adequate insurance on the vehicle!!

Don't confuse family for loyalty or you will broke all the time.

Good luck.

Answer 5

Not know exactly how much he needs to borrow I'm not sure this will work but at the link below it may be possible to get a unsecured loan with no cosigner. Interest rates vary though could be kind of high.

Answer 6

2 options here 1 pay at better rate 2 bankruptcy so sad and hard to learn a lesson but you live and learn hope the best

Answer 7

coverage has not some thing to do including your loan -- they in elementary words owe you the present, market fee of the vehicle. this is plausible that they don't opt for you having a previous due charge to the business employer by way of era of time this is going to take to settle the declare with you.

Answer 8

shoot the trouble maker in the kneecaps
he won't need a car then as he will be unable to drive