What you need to know about co-signing a loan
Every time you sign up for a loan, you automatically enter into a financial obligation as if it were your own loan.
In your case, depending on how the loan is structured, you may or may not have ownership of (legal ownership of) the motorcycle as a co-signer. You should contact your creditor to determine your level of responsibility.
Since the other party to the loan has passed away, the lender will likely contact both you and the estate agent to make arrangements to ensure that the loan payments continue to take place since you are also 100% responsible for the loan.
Therefore, I recommend that you work with the estate agent to discuss how they plan to proceed with paying off the debt as part of their estate settlement responsibilities.
Checking in with the creditor
When figuring out your obligations as a co-signer, contact the financial institution that issued the loan.
I took the time to contact a financial institution to see how they might handle a situation like yours. They told me that, from their point of view, a co-debtor is 100% responsible for the debt – the same as the other applicant.
They also said they would ask a financially established survivor to continue paying the loan contract. However, if the survivor is financially unstable, the lender said they could ask the estate agent to pay off the debt from the estate’s assets, which could mean selling the motorcycle the lender has as collateral.
Understand your options
First of all, don’t panic! When someone dies with outstanding debts, most creditors are understanding and will work with the estate and the sharer to ensure that the loan is paid.
This post I took out a motorcycle loan and the owner passed away. What are my obligations to the bank? was original published at “https://www.moneysense.ca/columns/qualified-advice/i-cosigned-a-motorcycle-loan-and-the-owner-passed-away-what-are-my-obligations-to-the-bank/”