Hunter, a 21-year-old from Michigan, recently called into “The Ramsey Show” with a problem that started the moment he became a legal adult. Just after turning 18, his mom asked him to cosign a car loan. She had bad credit, and he had no credit at all—but he agreed.
Repossession, Collections And A $10,000 Problem
The car was later repossessed, and now Hunter is stuck with the $10,000 debt. “I didn’t know anything about finances at all back then,” Hunter admitted.
Personal finance expert Dave Ramsey got straight to the point. “Wow, Hunter, that’s financial abuse by your parent,” he said. “I’m sorry. It’s completely immoral.”
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Since the car was repossessed more than a year ago, the debt has moved to collections. Hunter asked if he should just pay the full amount or try to get out of it another way. Ramsey laid out a very specific path forward.
Settle Smart, Protect Yourself
Ramsey told Hunter not to pay the full $10,000. Instead, he advised him to settle the debt for less—starting with an offer of $1,000. He warned, though, that this wouldn't be easy. “You’re probably going to be able to pull that off in about six conversations, putting up with abusive, moronic individuals on the other end of the phone.”
He stressed the importance of protecting himself in the process. “Do not give them your Social Security number. Do not give them your place of employment. Do not give them anything that will make it easier for them to collect this debt,” Ramsey said.
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Hunter was told to never give the collection agency access to his checking account. “If they have access to your checking account, they’re scum. They’ll clean you out. They lie.”
The priority is to get everything in writing before sending any money, especially the phrase “settled in full.” Ramsey said an email confirmation is acceptable, and warned that any abusive behavior on the phone should result in hanging up immediately. “They know if they can get you afraid or angry, you will be irrational and give them money,” he said. “If you feel your pulse rate going up, just hang up. Do it another day.”
Hunter just started his first week as a solo truck driver and doesn't have much money yet, but Ramsey told him he'd have $1,000 saved up soon. That money could be used as a settlement offer.
As for his relationship with his mother, Hunter said he still talks to her but doesn't give her money anymore. Ramsey seemed to believe the lender also acted unethically. “The reason I know these people are scum in this case is because they took the co-signature of an 18-year-old for his mother who was broke and didn't pay bills.”
“You've been screwed,” Ramsey told him. “And I'm trying to help you walk through this.”
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