In a situation that is unfortunate but quite common, our client contacted
us after he was served with a lawsuit by Credit Acceptance Corporation
for an old repossessed car. He informed us that he had co-signed on the
vehicle for his ex-girlfriend and that they had broken up shortly thereafter.
She took the car into her possession and our client never actually stepped
foot inside of it. She eventually defaulted on the payments and the car
was repossessed and eventually sold at auction. This is a common occurrence
that happens again and again in the New York and New Jersey area. Credit
Acceptance, Corp. which is a debt buyer acquired the debt from Kings Auto
Show for pennies on the dollar and decided that they would try to obtain
a default judgment against the owners of the car for over $16,000.
Credit Acceptance hired the New Jersey collection law firm of Lyons, Doughty
and Veldhuis, P.C., a firm we defend clients against in New Jersey quite
often. Lyons Doughty were unable to locate the ex-girlfriend in the matter
so they decided to pursue our client instead for the deficiency amount
of over $16,000. Unfortunately, cosigning on a car loan or any other loan
means that you are just as liable as your co-signer is which is something
that consumers are not aware of for the most part. Our client was in his
mid-twenties when he co-signed on this loan and though he was doing a
favor for his girlfriend at the time.
We submitted our answer with affirmative defenses to protect our client
against a default judgment. Lyons Doughty quickly contacted our office
to negotiate a settlement in this case as they knew that we would push
this case towards trial and they would have a difficult burden proving
that Credit Acceptance Corporation could link our client to this alleged
debt. The case was settled for $4,000, a discount of over 75% off of the
original amount. This was a fantastic settlement and it avoided a default
judgment as well as garnishment or a bank levy. However, it points to
the fact of how careful consumers must be when they are asked to co-sign
on a loan.