Am I liable for any part of the payment of the services rendered?
Full Question:
Answer:
Generally, the cosigner’s right to rescind is governed by the terms of the loan document and contract law principles. If the loan contract doesn’t allow a right to rescind fraudulent inducement of the cosigner is a defense:
1. If creditor’s false representation induces a cosigner to agree, or.
2. If a creditor knows, or is on notice, that false representation by principal induced the cosigner to agree.
The FTC's Credit Practices Rule places limitations on certain credit contract terms. Among other things, the rule prohibits nonpurchase money security interests in household goods, pyramiding late charges, confessions of judgment, wage assignments, and waivers of exemption. Surety has a right of reimbursement or indemnification of any loss against principal if part of all of debt is paid by surety.
In extensions of credit to consumers involving goods, services or money (not
real property), notice must be given on a separate document, and must be given prior to signing contract, with specific language of FTC rule. Truth in Lending Act disclosures need not be given to a cosigner, as long as they are given to a consumer who is primarily liable, unless the cosigner has a right to rescind. A cosigner can raise TILA violations in disclosure in defending against liability.
§ 444.3 Unfair or deceptive cosigner
practices.
(a) In connection with the extension
of credit to consumers in or affecting
commerce, as commerce is defined in
the Federal Trade Commission Act, it
is:
(1) A deceptive act or practice within
the meaning of section 5 of that Act for
a lender or retail installment seller, directly
or indirectly, to misrepresent
the nature or extent of cosigner liability
to any person.
(2) An unfair act or practice within
the meaning of section 5 of that Act for
a lender or retail installment seller, directly
or indirectly, to obligate a cosigner
unless the cosigner is informed
prior to becoming obligated, which in
the case of open end credit shall mean
prior to the time that the agreement
creating the cosigner’s liability for future
charges is executed, of the nature
of his or her liability as cosigner.
(b) Any lender or retail installment
seller who complies with the preventive
requirements in paragraph (c) of
this section does not violate paragraph
(a) of this section.
(c) To prevent these unfair or deceptive
acts or practices, a disclosure, consisting
of a separate document that
shall contain the following statement
and no other, shall be given to the cosigner
prior to becoming obligated,
which in the case of open end credit
shall mean prior to the time that the
agreement creating the cosigner’s liability
for future charges is executed:
NOTICE TO COSIGNER
You are being asked to guarantee this
debt. Think carefully before you do. If the
borrower doesn’t pay the debt, you will have
to. Be sure you can afford to pay if you have
to, and that you want to accept this responsibility.
You may have to pay up to the full amount
of the debt if the borrower does not pay. You
may also have to pay late fees or collection
costs, which increase this amount.
The creditor can collect this debt from you
without first trying to collect from the borrower.
The creditor can use the same collection
methods against you that can be used
against the borrower.
Please see the information at the following links:
http://definitions.uslegal.com/c/contracts-recission/
http://www.michbar.org/consumer/pdfs/CosignerOutline.pdf
http://definitions.uslegal.com/f/fair-debt-collection-practices-act/
http://definitions.uslegal.com/c/cosign/
http://lawdigest.uslegal.com/consumer-issues/consumer-rights-and-protection/
http://lawdigest.uslegal.com/debts-and-credit/fair-debt-collection-act/
http://definitions.uslegal.com/c/contracts-recission/
