Credit score

I agree with @macuser_22.  If you bring the account current, including all penalties, your credit score will improve and eventually bounce back to where it was.  Before doin it, you might ask the lender if they could waive some of the penalties and late charges if you bring it all current at once.  

 

My way of looking at co-signing is that banks are experts in figuring out who's at risk of not paying.  They require those people to have a co-signer who is lower risk.  They're pretty good at their job, and they rightly predicted your daughter couldn't pay and you could.  

 

Maybe you could help her shine the car up and sell it and buy her a cheap car.  The deal with her would be she's absolved 100% of any responsibility or hard feelings with you if she just helps clean it up and get it sold.  It would be tragic if this one financial snafu created long-term hard feelings.