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Cosigned for Sisters Car. Collection Company Put Bad Debt on My Credit Report. – Harriett

Written by Steve Rhode

“Dear Steve,

Collection agency have placed a bad debt on my credit report because I co-signed for my sister.

I co-signed for a car for my sister. she lost her job and the car was repo, since i have received letters from the collection agency for this debt.

During that time I was not aware that if something happen this would fall back on me. I tried to talk with the collection agency who has since then pass it on to another collection agency and so on.

All i wanted to is to settle and agree on a fair amount. The car was sold immediately after the repo. The balance on the car is 5,657.00 and my sister doesn’t have the money to pay and now fallen back on my credit report and now I can’t pay for it because I don’t have that kind of money. What can i do………this car need to be put in her name or something because this is driving me crazy.


Dear Harriett,

When you co-sign for a loan you are agreeing to take on 100% responsibility for repaying the loan if the signer does not.

You are more than welcome to try and settle the debt. But the only way to settle is to come to a mutually agreeable arrangement with the current debt owner. Even if you do settle it will not remove the bad debt from your credit report.

The options at this point are to ignore it and hope you don’t get sued, start making payments the collection company agrees to, consider filing bankruptcy to discharge the debt from your responsibility.

Sadly it looks like you just got an expensive life lesson in “Never Ever Co-Sign a Loan.”

Please post your responses and follow-up messages to me on this in the comments section below.


You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.

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About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

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