Co-signed a loan and I need to have my name removed

Question

I co-signed on a car loan with my partner, and now that we are no longer together I want to have my name removed. He has had the car a year now and has been on his job over an year, but he won't do the refinance to have my name removed, and I would like to know if there is something legally that I can do to have my name removed.

Answer 1

You're not going to like the answer -- the only way to get your name off the loan is to have the loan paid off. Unless there was fraud involved (and from your description there wasn't), the lender isn't going to let you off the hook. The bank wants as much protection as it can get. That's why you co-signed in the first place.

If you can convince your ex to refinance, that's another option. If he stops making payments, the lender will come after you, unfortunately.

Whose name is on the car title? If it's both of you, your ex will have an incentive to refinance. Tell him you'll take your name off the title when he refinances the loan in his name alone.

Answer 2

The OP asks this follow-up question:

being that my partner was only able to get the car due to me co-signing would a quitclaim actually work?

Your situation is that you run the risk of your ex defaulting, leaving you on the hook. Your ex's situation is that he runs the risk of you exercising your legal rights to 50% ownership of that car. This is a risky situation for both of you.

My suggestion is that you make an offer: I will remove the risk of me claiming the car, and in exchange, you remove the risk of you defaulting.

The way you'd remove the risk of you claiming the car is by "quitting" your claim. You sign a piece of paper saying that you renounce any claim to the car, and now his risk of you suing him to get the car back drops to zero. In exchange, he agrees to remove your risk of his defaulting, by taking out a second loan to pay off the first loan -- a refinance.

So let's unpack your question:

being that my partner was only able to get the car due to me co-signing would a quitclaim actually work?

It's not 100% clear what you mean by "work". Would a quitclaim actually remove your ability to sue your ex over the car? Yes. The historical situation that led to you being a co-signer is irrelevant. Would a quitclaim actually be incentive to get your ex to agree to refinance? I don't know; only he can answer that question.

I feel that maybe a quitclaim wouldn't work simply because I would be relinquishing my claim on the property and it was my claim or co-sign that made it possible for my partner to have the vehicle in the first place

The fact that these things have a causal connection in your history is irrelevant. The lender didn't give you the loan because you and your ex wanted to drive around in a car; the lender gave you the loan because you were going to pay it back with interest. That's the deal you made with the lender; they don't care if you have any legal claim on the car, all they care about is that they can come after you for the money you owe them.

Again, let me make sure this is clear: quitting the claim does nothing directly to get your name off the loan. Rather, it is a bargaining chip to get your ex to agree to refinance, which does get you off the hook.

Answer 3

I think that the conversation I would have is revolving around small claims court. This is where this matter gets dissolved if parties can't reach an agreement.

If your name is on the loan and you were in a relationship at the time of the loan then you own part of the car. In some states it helps that your name is on the title in some states it does not all. But just because your name isn't on the title doesn't mean that you have no stake in the car.

Basically whatever was paid for the car while you were in the relationship would be up in the air for shared value. A judge would determine if you two were sharing some costs (place of living, transportation, food, utilities). If you were there would be an implied contract given your name is on the loan. If your name is on the title it is really no contest. You don't even have to prove sharing costs.

So if your name is not on title - You still have a right to recover any money spent on car before the relationship ended. To the degree that a judge grants this depends. Worst case scenario is that the judge gives you nothing but in almost all cases they will demand refinancing as part of the agreement - since they do not want to hear about another civil suit a year later about the other party not paying for the car.

If your name is on the title - The worst case is your recover all of your costs which may be 50% of the amount spent on the car during the relationship. It may be that the judge requires a settlement of quit claim where you would admonish rights to the car for a given settlement and your name off the title. Depending on the lender they may not let your ex refinance or may just transfer the loan over into his name only (I have gone through this process for a car and house). It really depends on what status the loan is in and if lender would given them a new loan right now.

In some states if you file a quit claim your ex has to pay all of your attorney's fees which would be absolutely ridiculous to do unless this is a 200K car. Obviously I would not mention this to him because first of all it is a tactic that you can use to your advantage and second it is an unruly threat using archaic laws to your advantage.

So it is highly likely he will be made to refinance or sell the car. There is also a possibility that you could recover a good portion of the car's value. In Missouri for example if your name is on the title they take the car price minus loan price and give you half as a standard basis - no matter if you don't have a dime of money into the car.

I suggest you firmly mention that you will have to file a small claims suit if he can't refinance. Be civil about it. If you do have money invested into shared costs or directly to the car mention that too. If the talks aren't going anywhere during your second conversation (let him think this over and research) mention that almost surely the judge will have him refinance and possibly allocate part of the car's worth to yourself. The third conversation is giving him a copy of the filing with the court. Even after filing you don't have to go to court and often this wakes people up.