Legal Question in Credit and Debt Law in Idaho

Re: Renegging on a loan co-applicant

ARe you a "co-applicant" or "guarantor"? A co-applicant would suggest that the loan has not yet been granted; if that is the case, you can just go into the bank and cancel the application.

However, it sounds like the loan was granted. In that case, you have no right to cancel your guarantee. However, you can - and must - take steps to protect yourself. Notify the bank that you will not be responsible for any further credit. You demand to be notified immediately of any default on the loan. Get a copy of that notice receipted by the bank, to prove that you gave the notice. Then, if you receive notice that the debtor is in default, go to the bank and pay the immediately to minimize interest and other late-payment charges - not to mention costs of a lawsuit to collect hte debt.

You probably have rights of "subrogation", to step into the banks shoes against the debtor. This may include taking possession of collateral, such as a car.

Check this with a local lawyer, as the laws change from state to state. If you cannot afford a lawyer, try your local Legal Aid office, or the bar association referral service.

Good luck!

Susan Freiman

The Legal Clinic

P.O. Box 9407, Herzlia Street 29