Student loan default impact on co-signer

There's a specific forum for Student Loans...try posting this question there so that it'll get attention. I know Soaplady is around and she knows the deal when it comes to student loans.

First off ~ Are these federal or private loans? Has she had late payments so far?

Like I said..post these questions and answers over on the other forum ~ I'm sure you'll get the information you're looking for :)

With a cosignor, these are more than likely private loans. If the niece defaults, it will go into collections and your both your dad and your niece will be sued. You might wanna suggest that your niece work a second job before this gets out of hand....she will not like what will happen if she defaults.

I never had anyone co-sign for my student loan. However....a friend of mine had her co-sign on hers. The Student Loan went into default. BOTH my friend and her dad were sued over it. They BOTH have to pay. Hope this information helps.

My son has paid very little on his rather large loan since graduating 5 years ago. He has successfully deferred the loan numerous times but I have also receive letters from Sallie Mae when he does not pay. I am tired of these letters.

My son will come into a fairly large sum of prize money in a half year or so. He tells me he wants to use the money for other things rather than pay down his debt. What are my legal rights to force him touse the money to pay down his debt which accrues interest regularly. Can I put alien on the windfall?

You son is an adult.....you have no legal rights whatsoever.

Did you cosign on loans with him?

You son will learn...eventually. One day he will want good credit.

if the loan defaults, couldn't the 'prize money' essentially be taken from him if sued?

apikuros, even though you have no legal rights on your son, you need to give him a swift kick of reality, get him to realize how much damage this is doing to YOU too. I learned very quickly how much damage I did to my co-signer by not paying on time. Now I have been on time for over a year.

I the loan defaults, mom or the lender would have to take son to court and win a judgement before any moneys could be taken...that is provided there is any money left.

I am more than angry because I co-sign for my ex-hubby in 2001 when we were not married to go to computer school. The student loan was defaulted in 2007 when I was separated with him. Now i am the only one they can get in contact with when they call. This is destroying my credit and he doesn't seem to care. What can I do legally to get my name off this sallie mae student loan? It's about 7,500 dollars and I have paid $1, 600 already into this debt. I can no longer pay them anymore please help.

Priceless....as the cosignor you are are just as liable for this debt as your ex hubby. You cannot get your name removed. Your choice now is to hunker down and get it paid off or locate your ex and let the CA know how to find him.

my son will be divorcing his wife. they will be signing separation papers soon. (they live in n.c.). my son co signed for her son from a former marriage for him to get a student loan. now that things have split can my son get his name emoved as co signer.

Nope. Cosigning for the stepson really had nothing to do with his marriage....anyone can cosign. Also since the step son is not party to the marriage, it cannot even be court ordered in the divorce decree.

If your wife secretly co-signs on a large loan for someone and the person defaults on the loan. can the lender go after your house that is jointly owned by the both of you if your wife is unable to pay

If a judgement is filed against your wife, it will affect the house. A lien will be placed on it.

The co-signer always gets screwed if the person they co-signed with does not make payments. That's why it is never a good idea to cosign a loan no matter who it's for, friends, family, whatever. They can come after any co-signer as well as the co-signer's property and income (houses, income). I think they may even be able to go after social security, too, but I'm not sure about that.

If as cosigner I pay off the student loan for a relative who refuses to pay can I sue and possibly get a judgment against the individual?

Most likely not. You voluntarily took on the cosignor responsiblity.

I co-signed on a student loan for my niece with Salliemae in 2003 and Wells Fargo in 2004. Since my niece graduated she has refused to pay the loans. She let Well Fargo go into default. Her mother finally paid off Salliemae and I made an agreement to pay Wells Fargo ( in Default) but not the full amount owed. Wells Fargo agreed to the amount. My question to anyone is does this affect my credit score negatively because I did not pay the full amount? My credit was already affected by the loan going into default. Also if I can be a help to anyone out there, please do not co-sign. I did not think that my niece nor my own sister would leave me to pay these loans on my own. Yes my sister paid the Salliemae loan, but it took her 3 years to agree to it. Total cost of these loans (34,000). I did take my niece to court and won for the payments that I had made, however it is not an automatic payment. You have to submit more paperwork to have her pay, monies, etc garnished.

Making payments on a default will do nothing to help your credit....the status will remain as defaulted.

My sister asked me to co-sign for my niece to go to school. The original note was for $5K. I agreed but never received any paperwork. She said she did it electronically. Well they are late on payments and I have received a bill that shows the loan was for $8k. I never signed anything, what can I do?

The loan was probably for $5000 but it starts accruing interest on day one and generally the interest is higher than federal loans. So more than likely the difference is interest and late fees.

The bill states the initial loan was for $8K not the $5K I agreed to. I never signed anything. Do you normally get loans of this size through Sallie Mae without signing anything?

my sister is in default on her student loan - I have offered to pay the bank if they will only bill me on it. they say they cannot without her premission - is that no priceless. since I cannot get her to do anything at all - how do I get them to at least send me the damn bill before my credit is ruined?

Student loans in default will generally dont send bills.

Are you the cosignor?? Is this a private loan?

Quote:

My divorce decree states that my ex husband is responsible for paying for his own educational loans. We lived in a community property state while he was in school and I am a cosigner. The larger of the two loans is a private loan and is on a graduated repayment plan that doubles next month. To protect my own credit, I agreed to have the payment deducted from my bank account each month. He isn't paying his student loans or his child support and this is costing me a lot more than I can afford to spend. If I stop paying and am served with a lawsuit, can I respond with a copy of my divorce decree and his location and have them go after him or am I stuck paying for his debts?

Nope. The divorce decree means nothing to the student loan holder. You can however take your ex to court yourself and sue him for non payment.

My husband co-signed 3 student loans for his (wife at the time). She travelled with the money and with another man. They divorced. She has other student loans that he's not on. She left my husband for the teacher at the school she ended up at. She will not pay her debts nor honor to have the school loans put in her name and not hold him liable for the debt as stated in their divorce. The amount is approxiametly $85,000. Please help! What recourse do we have?

Your husband will have to haul her back to court for not honoring the divorce agreement.

She cannot have them put in her own name...that wont happen. But the judge will make her pay them. Otherwize your husband will be held liable.

Several years before we were married my wife cosigned a student loan for her brother. He has recently gone into default and the collections people are calling.

As her current husband will I get dragged into this?

Probably not. You were party to the debt of your own free will.

Dear SoapLady, In 1988, I cosigned a law loan with Sallie Mae of $12,500 for a person on my faculty. (big mistake) I never paid anything on the loan and she paid as little as possible, with the result that in June of 2008, the loan was about to go into default at $17,000. At that point Sallie Mae agreed to accept $9,500 from me to settle the account. I have a letter from the debt collection agency confirming this fact and Sallie Mae also has a record of my June 2008 payment.
However, Sallie Mae never closed the account (I found this out by chance from a form mailing.) After two months of my nagging them, they finally closed the account in November of 2009. During that time about $1200 of interest had accumulated. I realize I will get stuck with the cancellation of debt as income. And also that I will never get any credit for the $9,500 paid, because it was credited to 2008.
My question is: Why should I pay my tax rate x the $1200 accumulated through Sallie Mae's error? Underpaying taxes is not a solution, nor, unfortunately, is suing Sallie Mae. They made a federal tax error themselves and will not want to admit it. I know this amount is not much in the big scheme of things, but it is the last straw! Could I ask the Feds if they want an amended return for 2008?
Thanks for any ideas,
Suzanne

You should have been looking for the interest statement a year ago, not now.

The 1099 should reflect what your settlement letter says.

I co-signed a private loan for my daughter with citi bank. She can't find a job and cannot make payments. They sold it to a lawyer. The lawyer has filed a complaint. I am retiring in January 2011. Will they also be able to take my retirement income?

It was not sold to an attorney, it was placed with an attorney. Student loans are not sold.
They will not be able to garnish your retirement as long as you keep the courts informed but if you own any property it can be liened.

If you cosign, it is YOUR loan. No matter what. Never do it.

I co-signed a Sallie Mae loan for my son's girlfriend; she is now in default. She promised to make restitution. Her parents still claim her an a dependent on their IRS and live in Washington State, although our son supports her. Can I pay the loan off and place a lien on her parent's house for the loan balance?


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Nope. Her parents took no liability for the loan....you did. They are free and clear.

Why wouldnt her parents cosign? That maybe should have told you a story....

How can they "make you pay" if you have minimal/no assets? My son is running into trouble with trying to repay his private student loans, two of which my husband co-signed. My son is currently underemployed (makes barely enough to pay his portion of rent in a shared apartment); he has no assets. My husband and I have less than 10,000 equity in our house and no other assets (two old, high mileage vehicles worth less than 5K). Our income barely meets our expenses now, so we are not able to pay his loans as well. We have tried unsuccessfully to negotiate a longer loan term to lower the payments, but the loan company refuses to help us find a way to pay. It is laughable that they "demand" the entire amount. If all of our assets were sold, it wouldn't even cover half of these loans. Why won't they work with you when you are willing to pay something?

This is the nature of private student loans...they do not have to work with you. They are not government backed so their are no plans to pay what you can or income contingent. Plus the agreement you signed in the prom note stated "balance due in full on demand upon default." Make him pay? They will sue and then garnish wages.

Has your son looked at picking up a second job?

That is the part I don't understand...what do they sue for when you don't own anything other than a very small amount of clothing? Our assets, I believe, would be exempt because they are so small. I don't know if they follow the same rules as for bankruptcy (which we are considering), but we fall into an exemption category because our income is below the median for our state. What exactly can they "garnish" because we have no disposable income? We can barely buy groceries.

Two jobs doesn't mean much when your bills are very high. My son already works 70hours/week. He wasn't able to finish his degree because he was maxed out on loans so it is hard to find work that pays - in this economy it is hard to find work at all. He was unemployed for a while before finding anything.

Also, wouldn't it make more sense to let you pay what you can? For instance, one of my son's loans is $452/month (that's right - one loan). He can send $200 this month - we can maybe add $100 - but of course we wouldn't pay one of our bills to do that. He just started two jobs last week and is trying to catch up. Why wouldn't they allow this when sueing costs them money and, in our case, wouldn't net them as much as we could send on our own. He's been paying monthly for almost a year, but missed the last two payments when he lost his job.

That is just the way private loans operate. And student loans are non dischargable in bankruptcy so that wont help. They will sue to protect their interest regardless of whether or not he is paying.

Does he have federal loans as well?

How does "garnishing wages" work? For instance, if you barely earn enough to meet your expenses....i.e. rent, electricity, groceries....and you really have no disposable income....what can they do? If they take your rent money and you are homeless, then you have no job. What do they garnish then?

My son has been unemployed/looking for work for several months. Is now working two jobs/7 days a week. Not high paying though. He is 2 classes short of his degree and cannot finish because he is maxed out in loans.

He has no assets at all....no computer, no real furniture, no life insurance. Just his clothing. Pretty much the same for us other than a very small amount of equity in our home (maybe) and two cars that are worth not much. No insurance or savings here either. My husband co-signed, not me, and the house is in both of our names anyway.

I didn't see your response so please disregard the above post. I understand they are not dischargeable in bankruptcy, I was only explaining that bankruptcy laws exempt you from losing assets if they are small. I can't see where they would try to go after two cars that are basically ready for the junkyard and a home that may or may not have less than 10k worth of equity (we could be under water, for all I know). He has federal loans, but those aren't a problem as they are currently deferred and, of course, are much lower. I just don't understand what they can sue for if you have nothing for them to take and no disposable income.

looking for my most recent post...

Garnishing on a judgement in most cases would get the creditor 25% of net wages.

What you are not understanding is that private loans are meant to be a bridge between federal aids/grants, family contribution and the cost of attendance. Early in ones education career when choosing a school, they should know whether or not they can afford to go and complete an education without going into horrific debt. Private loans are very similiar to other consumer debt except they allow you not to pay while in school and they dont require collateral. Consequently, they should be borrowed only when all federal aid including PLUS loans have been exhausted. Anyone who is depending on private loans for their education run the risk. It is all up to choices.

By suing, they protect their rights. Who knows what will happen a year from now....5 years from now or 10. They as the creditor will be first in line.

I cosigend somebody for help know he is married have a job & his wife have a good job but don't want to pay the loan what should i do.

Has the loan defaulted?? You will both end up being sued for the debt....he will end up paying.

gathering from briefly reading over these posts is that there are basically no options for the co-signer if the primary borrower defaults except to pay the loan and then sue the primary for the amount paid and HOPE that is works out. i am right?

I co signed a student loan thru Sallie Mae. After one year he was suppose to refinance this loan which he did but my name is still on it. They also gave him 5 more loans after the I co signed on the first one. No he is in default. How can I have my name removed. I feel it is wrong and should be illegal for the lending institue to lend more money to a student when they have a co signer on the first loan. Do I have any hope of saving my credit. My nephew who I cosigned for whats to cosolidate all his loans but they keep giving him the run around. What are my options.