Ia – Co-signer On Auto Loan, Borrower Disappeared, Loan In Repossession. What Are My Options?

Location: Clarinda, IA

Hi everyone — I’m looking for general legal guidance regarding an auto loan I co-signed.

A few years ago, I co-signed an auto loan for a vehicle that my ex (the primary borrower) has possession of. The loan is through Ally Bank. I am not the primary borrower, and I do not have possession of the vehicle, keys, or any ability to control what happens to the car. The vehicle is not in my driveway and I do not know its exact location.

The primary borrower has repeatedly been late and has now stopped making payments. I contacted Ally and they confirmed the loan is currently in repossession status. They told me that making one monthly payment could temporarily remove it from repossession status, but I’m concerned that if I pay now, it just becomes an ongoing cycle and I’m essentially paying for a car I don’t have.

I have tried to contact the primary borrower many times and have been unable to reach him. Based on past behavior, I do not believe he will reliably make payments in the future either. I also cannot realistically take over this loan long-term, and I’m trying to limit damage to my credit and finances.

I understand that as a co-signer I may be legally liable for the loan balance and any deficiency after repossession/auction. I’m trying to understand what legal options I actually have at this point given that I cannot locate the vehicle or get the borrower to cooperate.

My questions:

1. Co-signer liability: What is the general legal exposure for a co-signer once a loan is in repossession status and the borrower is unreachable? 2. Voluntary surrender: If I do not know where the vehicle is and do not have possession, is there any way for a co-signer to initiate voluntary surrender or reduce damage/fees? 3. Deficiency balance: After repossession and auction, is there any common strategy to challenge or negotiate the deficiency balance or fees, especially when the co-signer never had possession of the vehicle? 4. Legal action against borrower: What legal claims are typically available against the primary borrower (ex: reimbursement/indemnification, breach of agreement, unjust enrichment, etc.) and would small claims court apply? 5. Venue/jurisdiction: Since I live in Iowa and the borrower is out of state, where would a case typically be filed (Iowa vs borrower’s state), and does that affect strategy? 6. Paying to stop repo: Is it generally advisable for a co-signer to pay one month to stop repossession temporarily, or can that create more long-term liability (or weaken legal claims later)? 7. Best next steps: What would be the most practical next steps to protect myself and document my efforts (written notice to lender, certified letters, etc.)? 

I appreciate any general guidance on what a co-signer can do in this situation, especially when the borrower is unreachable and the vehicle location is unknown.

Thank you.