Before You Co-Sign Anything, Beware Someone Else's Debt

March 12, 2014 — -- Dear ABC News Fixer: When I was 22, I needed a vehicle. I had no credit so a relative co-signed on a loan for a 1994 Ford Ranger through the Dallas Teachers Credit Union.

Over the next few years, I paid well over my minimum payment due, and by 1998 I was one month from paying off the vehicle. I received a call from the credit union stating they wouldn't release the title of my truck unless I paid them the balance due on a different loan from the credit union on which my relative had defaulted. I was confused. I had never co-signed on any subsequent loans this relative had made, nor did I know of any other loans. They refused to give me any details other than a dollar amount they would accept by a specified date. The amount was over $18,000.

I did make my final truck payment. Later, I received a copy of my loan agreement and just as they had indicated, it stated that any and all future debts to them were tied together. According to the contract, anything my relative did, even without my knowledge, I was liable for it.

Over the years, I've sent letters to the credit union, which has changed hands. They always respond the same way -- that they will release the title of my truck when I pay my relative's debt. It has been 16 years since I paid off my truck and I still have no title.

- JoAnne Staab, Portland, Ore.

Dear JoAnne: The ABC News Fixer has long advocated for people to think very carefully about co-signing someone else’s loan – too many sad stories about Cousin Eddie sticking Aunt Edna with the bill – but until you wrote in, we didn’t know a person could get entangled in their co-signer’s subsequent financial affairs.

But that’s exactly what happened here. You showed us that long-ago contract from 1994 with the credit union that no longer exists under that name, and indeed, it did connect this loan with your relative’s subsequent failed loan. The sad part is you paid off your truck right away, and the relative’s financial problems happened so long ago, they no longer appear on a credit report.

You told us you wanted the title in case you decide to sell the 20-year-old truck for parts or donate it to charity. We were hopeful that the current ownership of the credit union would find a way to help you.

We got your problem to Eric Cooper, vice president of credit risk management at Credit Union of Texas, and he promised to look into it. Soon after, you got a phone call with good news: even though the credit union maintained that the title was still legally theirs to keep, they had decided to turn it over to you.

This apparently is a lucky year for you and your truck. You said the title arrived this week in the mail – so on your truck’s 20th anniversary, it’s finally, officially yours.

- The ABC News Fixer

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