Dispute or Statement? – husband’s bankruptcy

[Underachiever]

I co-signed (not co-borrowed) a title loan for my husband through a credit union in 2009; he filed bankruptcy in 09/2010.  The vehicle securing the loan was my primary transportation, entirely in his name.  There were no other marital accounts; I didn’t file bankruptcy.  In October of 2010, the credit union presented a reaffirmation agreement in an amount 5 times the balance of the loan, which was approximately $1,300; if my husband didn’t agree, they would repossess the vehicle, despite that at that time the loan was still paid as agreed.  I had been paying the title loan since it began in 2009, up until I was instructed to stop doing so in October of 2010 by husband’s attorney, upon decision that we did not plan to reaffirm the loan for its “fair market value” of $7,600.00.  My credit was not yet flawed so I financed a car in mid October, to replace the one that was going to be repossessed.  The credit union never once attempted to collect from me the balance of the title loan, nor did they otherwise attempt to contact/notify me of what was occurring with the loan I had co-signed for.  It was as if they didn’t realize there was a co-signer, or they somehow thought I was included in the bankruptcy.  On the other hand, it was likely that their intent was to repossess that vehicle as an asset to recover their losses on his other accounts – the vehicle was the 2nd in his name, which I believe meant that it was exempt from any type of protection. 

In October of 2010, just after I secured a replacement vehicle, the attorney notified the credit union that we would not execute the reaffirmation agreement, and agreed to turn over the vehicle, letting them know it was available immediately; we were told they would retrieve it from our residence.  We were never instructed or otherwise requested to deliver the vehicle to a credit union branch or any other location.  The credit union did not retrieve the vehicle until early January; it sat in our driveway 24/7 for about 3 months before they sent a tow truck (which was strange because it drove just fine).

Now, his credit report has all green “ok”s for this account and mine says 30-60-90 days for Nov/Dec/Jan, depending on which credit report I look at, and Experian is even reporting 90 days in February.

The vehicle was auctioned for about $3,800 – more than covering the loan I co-signed, so the loan is listed as paid, but it’s the only account on my report that has any late payment activity.

I am not sure if I should address Ascend (the credit union) directly, or dispute with the 3 bureaus, or add a consumer statement, or do nothing.  With disputing, I am not sure when they should have listed that account as ok; at the time they were notified to retrieve the vehicle and it was available, or at the time they actually picked it up – even though the latter was not within my control, or maybe they can report it until the vehicle actually sells at auction.

[p-]

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@Underachiever wrote: 

I co-signed (not co-borrowed) a title loan for my husband through a credit union in 2009...his credit report has all green for this account and mine says 30-60-90 days for Nov/Dec/Jan, depending on which credit report I look at, and Experian is even reporting 90 days in February.

I am not sure if I should address Ascend (the credit union) directly, or dispute with the 3 bureaus, or add a consumer statement, or do nothing.  

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Sadly, co-signing is co-borrowing when it comes to your credit report.  If there was a period of non-payment then they are allowed to report the late payments in the payment data on your report.  Disputing likely won't help you, as there is a good chance it will just be verified by the creditor.  Most people would advise you not to try this, as you could be considered a frivolous disputer and ignored.  In this case, I personally would try it anyway.

If not, or if that doesn't work, try sending a goodwill letter to the reporting bank and see if they will remove it from your report.

[Underachiever]

Thank you for the insight.  I am going to do some research on a goodwill letter; maybe that should be my first step.  I had hoped it would matter that the credit union agreed to retrieve the vehicle in October, but failed to do so until almost 90 days later, on its own accord.  The loan was paid as agreed in October, but was included in an active bankruptcy, and upon agreement (in October) that reaffirmation would not happen, the credit union should have retrieved the vehicle and closed the account since it was in otherwise good standing.  I also thought it would matter that the creditor intended to repossess the vehicle not because the loan was outstanding, but because the borrower would not reaffirm the loan for 5 times its balance during his bankruptcy proceedings.  I am not sure if a payment is genuinely due when the borrower is in active bankruptcy, and qualified legal counsel has instructed the co-signer not to pay on an account included in an active bankruptcy case, the creditor has been notified and has agreed to immediate repossession, and with the added bonus that the creditor does not attempt to notify or otherwise pursue a co-signer, ultimately for their own financial gain.  If they had contacted me, requested I pay the loan balance of $1,300.00, the account would have been closed prior to completing the bankruptcy process, they would not have had the opportunity to present an unreasonable reaffirmation agreement, and they would have walked away with $1,300, instead of the 7,500 they wanted to recoup, or the 3,800 they ended up with. 

The reaffirmation negotiations were complete in October; I cannot reason that the credit union expected payment after October – they certainly never asked for it, and to their credit, it is easy to see the reasons why it behooved them to not to.  I did not receive a single late notice, phone call, not even a statement on this account after October.  I would not want to be considered a frivolous disputer, but worst case they should consider the account paid/closed in January, when they finally picked up the vehicle.  Best case, they would update the account as paid and closed in October when they were notified and the vehicle was readily available to them, or at least in November when the legal proceedings were complete and they had 30 days to process the logistics of taking possession of the vehicle.

My Transunion report doesn’t show the loan as paid until March – 2 months after they took possession, 5 months after they committed to pick up the vehicle.  From my prospective as a consumer, it’s not frivolous because they are reporting less than accurate information.  It is the difference between no late payments on my entire credit history versus up to 3 instances of late payments, escalating from 30-90 days – the most recent negative item(s) on my report, making it a big deal to me, especially because I had no control of this account post-October, nor any fault regarding the credit union’s lax effort to pick up the vehicle. 

I am going to figure out how to draft a tactful goodwill letter without offending the ethics of the credit union.

Thanks again for your insight.  

[p-]

Anytime...  Look, if you ahve any of that in writing and there is a genuine discrepancy on the report from what is true, then I would use it as leverage to try to dispute.  And read up on direct disputes.  If your GW letter doesn't work, that might be an avenue.

Good luck!