Cosigning a loan for a friend or family member's car is common, and so is the surprise when a deficiency lawsuit shows up addressed to the cosigner instead of, or in addition to, the person who was actually driving the car. Wisconsin law is clear that this can happen — but it's just as clear that a cosigner doesn't lose the protections the primary borrower would have had.
Yes, a cosigner can be personally liable
When you cosign a consumer credit transaction in Wisconsin, you're agreeing to be personally responsible for the debt, not just a character reference. Wis. Stat. § 422.305 requires the lender to give you a specific written notice before you sign, and that notice has to say, in plain terms, that you will be liable and fully responsible for the amount owed even though you may never have had any right to the car itself, and that you can be sued for the amount due even if the primary borrower has the money to pay. If a deficiency remains after the car is repossessed and sold, a cosigner is a legitimate target for that lawsuit.
But a cosigner keeps every protection the borrower has
Here's the part that surprises people in the other direction: Wis. Stat. § 422.420 prohibits a lender from using cosigner paperwork to strip away any right or protection that the Wisconsin Consumer Act gives the primary customer. That means the same rules covered on our Automobile Deficiencies page — including the rule that can eliminate a deficiency entirely when the amount owed at default was $1,000 or less, and the rule requiring the deficiency to be computed against fair market value rather than a lowball sale price — apply just as much to a cosigner being pursued as they would to the original borrower.
A lender also can't charge a cosigner fees that couldn't legally be charged to the primary borrower. If a cosigner is being asked to pay more than the borrower would have owed, that's worth a hard look.
What happens if the required notice was never given
The notice requirement in § 422.305 exists to make sure a cosigner understood what they were agreeing to. If a lender never gave that notice, or gave a defective one, that's a violation that can be pursued separately under Wis. Stat. § 425.304 — though it's worth knowing that a missing or defective notice doesn't, by itself, increase or decrease how much the cosigner actually owes on the underlying debt. It's a separate claim, not an automatic defense to the deficiency itself.
What a cosigner facing a deficiency demand should check
- Was the required cosigner notice actually given, in the right form, before signing? If not, that's a potential claim in its own right.
- Is the deficiency amount being computed the same way it would be for the primary borrower? The $1,000 threshold and fair-market-value rules apply equally.
- Is the primary borrower also being pursued, and for how much? A cosigner's exposure is tied to what's actually owed — not a separate, larger number.
- Did you also sign as a joint borrower, rather than a cosigner? The paperwork sometimes blurs this, and the label matters less than what you actually signed.
If you cosigned a car loan and are now facing a deficiency demand or lawsuit, bring us the loan documents and the cosigner notice you received — or didn't receive. We'll review it with you at no cost for that first conversation.