Personal loans - selling a loan to another party?

Question

I am in AZ and own a signature loan that is now 60 days past due.

Long story short - I co-signed on a loan with a friend who had sub - 600 FICO score. 12 months, no payments or interest. She made no payments for a year and I paid it off to prevent the hit to my credit score.

I then got her to sign and notarize a personal signature loan for a little over $3300 at 10% interest and a $25 late payment.

Payments were on time for about 5 months. Now she is over 60 days with no payments. She's claiming hardships and promised to get paid current. She still owes me over $2000 with late fees and interest after paying for almost 12 months.
The contract states that I can send it to collections or sell the loan any time I want. I told her 90 days, no payment and I will send it to collections.
What would you do?
Does anyone have expearance selling a loan like this?
Should I take her to small claims court instead?
Or just write the amount off on my taxes as a loss?

Answer 1

First, never loan money to a friend. Second, this is a small amount, take her to small claims court where the repayment of this money will be handled by the court you may wish to write it off, but speak to a tax advisor, you may want to let the interest and late charges accrue to the max you can write off for this type of write off. Collections will only split your nut, and serve to mar her credit which appears to have already been done

Answer 2

1

Answer 3

I would write it off and try to post it as a loss on taxes. If you have a legal document, this should be possible. My second choice would be collections but this does 2 things. It effectively precludes a resumption of a relationship with this friend and you give a percentage of whatever is collected to the collection agency. I absolutely would not take it too small claims. In most states, small claims judgements are unenforceable. You would be better off going to Jugde Judy.