What is my liability as a co-signer regarding repossession and a motorcycle loan?
I co-signed on a boyfriends motorcycle 6 years ago. We broke up and he refused to pay for the motorcycle so I arranged to have the motorcycle picked up as a repossession from the finance company. They then sold the motorcycle at an auction. I recently got a letter saying that I owe the finance company $10,000. Is there a time limit on how long after the fact they can contact me about this matter. What is the best way to handle this?
1) As a co-signor, you are liable for any deficiency; that is, if the motorcycle, after repossession, was not worth enough to pay off the balance of the loan (common, owing to depreciation), the lender can go against either or both co-signors for the balance remaining.
2) There is a time period to try to collect from you. It runs from when the default occured (e.g. when the loan stopped being paid), not from when loan was taken out. You need to consult with an attorney about your specific case, but a typical time to sue (called a "statute of limitations") in OH for a matter like this is, I believe, up to 15 years (for a written contract or a promissory note), so it's not likely to run out any time soon.
3) Options: a) pay; b) pay and then sue your ex-boyfriend for his share; c) fight the case, though if you were a signor and then you didn't pay, you may only have limted grounds or ability to challenge; d) negotiate a settlement, to pay the debt for less than full--this is voluntary on the part of the lender, and you'd have to show financial hardship and convince them this makes sense; e) consider bankruptcy, depending on your overall situation.
There's no specific time limit in the law about when they can contact you, the limit applies to when they can file a lawsuit against you. It's called the statute of limitations. In Ohio, there's an unusually long period, for suits on written contracts such as this one: 15 years.
I'd start by trying to see if you can work out a payment plan, and I'd do that as soon as possible; the longer you wait, the less likely it becomes for the company to agree and the terms of the plan will be tougher. If you don't do that (and don't pay the $10,000 in full, or some compromised lesser sum which might also be possible if you can come up with it right now), they will sue you.
If you can still find the ex-boyfriend, you can sue him, or bring him into a lawsuit from the finance company. He's still responsible for this money, too, but that's between you and him, because you both signed, and the law doesn't require the finance company to care about that at all.