Co-signing a loan for someone you're dating rarely ends well, and Mary from Seattle learned this lesson the hard way. The 60-year-old recently called into "The Ramsey Show" to explain how a romantic gesture turned into a financial nightmare involving a repossessed Volkswagen Jetta and about $29,000 in remaining debt.
"I was an idiot," Mary told personal finance expert Dave Ramsey, cutting straight to the heart of the matter. In fall 2021, she co-signed a vehicle loan for her then-boyfriend, who was 43 at the time. Fast forward to today: the relationship is over, the 2019 Jetta has been voluntarily repossessed, and Mary is holding the bag.
The Financial Picture Gets Worse
Mary's situation is particularly tough because she wasn't in a strong position to begin with. She earns $61,000 a year, has zero savings, and carries $3,000 in credit card debt. To make matters worse, she had been helping make payments on the vehicle even though her ex-boyfriend earned more money than she did. It's the kind of financial arrangement that makes sense emotionally in a relationship but looks absolutely brutal in hindsight.
After the relationship ended, Mary convinced her ex to return the vehicle to the dealership when he couldn't keep up with the payments. The car hasn't sold at auction yet, but once it does, lenders will come after whoever signed the loan for whatever balance remains.
Ramsey laid out the reality plainly: "If the borrower stops paying, you become the borrower."
Hoping For Settlement Money That May Never Come
Mary asked Ramsey whether she could place a lien on a settlement her former partner was expecting from a motorcycle accident. She mentioned that she had also co-signed his Harley-Davidson loan, which was at least paid off by this point. She even had text messages where he promised to cover the remaining Jetta balance.
"I don't trust that that's going to happen," Mary admitted, which seems like a reasonable assessment given how things have gone so far.
Ramsey shut down the settlement idea immediately. Waiting around for money controlled by someone else isn't a strategy, he explained. Planning your financial future around another person's potential windfall doesn't resolve your current debt problem.
Ramsey's Game Plan For The Debt
Vehicles typically sell at auction for less than what's owed on the loan, leaving a deficit that lenders pursue from whoever signed the paperwork. Ramsey's advice was practical, if somewhat uncomfortable.
First, he told Mary to inform creditors that she has no money and to direct them toward the borrower, who's expecting that accident settlement. If that doesn't work, she should know that repossession balances are often settled for less than the full amount owed.
Ramsey suggested Mary tell lenders: "I want to settle my part." The key is to negotiate only her portion of the debt, get written confirmation that the obligation is completely cleared, and make sure her name is removed from the loan entirely. He also pointed out that creditors typically move slowly, which gives her time to address her other debts before serious negotiations begin.
It's not a perfect solution, but for someone earning $61,000 with no savings and other debts piling up, settling for a portion of what's owed might be the only realistic path forward. The bigger lesson, of course, is one Mary already acknowledged: co-signing loans for romantic partners is a financial decision that can outlast the relationship itself.