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VIC Daughter Took Commonwealth Bank Loan for a Friend - Any Options?

Discussion in 'Debt and Bankruptcy Law Forum' started by Rona, 2 August 2015.

  1. Rona

    Rona Member

    20 June 2015
    Likes Received:
    My daughter has taken out a Commonwealth Bank loan for a friend who bought a car off her, as she had a bad credit rating, the friend has missed one payment so far and the bank is harassing my daughter. The friend has turned difficult, not answering her phone text messages ext.....

    The loan is $22,000, the car is in the friend's name. My daughter wants the loan out of her name as she has realised she has made a very huge mistake. This girl is on a pension.

    My daughter managed to get a statutory declaration from her saying she will pay the monthly repayments to my daughter. The bank has just arranged to direct debit from the friend's account.

    What can my daughter do and what would be the best plan of action?

    Thank you.
  2. Sophea

    Sophea Guest

    As you are likely already aware, if your daughter's friend fails to pay the loan, your daughter will be held 100% responsible for payment of the loan by the bank. She may however have grounds to sue her friend for the amount that she had to pay toward the loan. However this would require significant costs associated with going to court and if her friend is on a pension, there is no guarantee that she would have the money to pay any judgement against her, although she would hopefully at least still have the car.

    The statutory declaration is a good start for proving to the court the arrangement that was made between your daughter and her friend. If worst comes to worse and friend fails to pay out the loan, your daughter by paying off the loan herself would gain an equitable interest in the vehicle which would be recognised by the court even though her name is not on the title. A better way to structure the agreement may have been for your daughter to agree to transfer title to the vehicle to her friends' name upon full payment of the loan. If she could get friend to transfer title to her now - to be re-transferred to friend upon full payment of loan that would protect her, but I don't know how that would go down in reality.

    Is the loan secured by the car? (I am assuming not, since the loan is in your daughters name and the car is in her friend's name.)

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