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Student loan default impact on co-signer

Submitted by on Sun, 11/02/2008 - 09:20
Posts: 202330

My 80 yr old dad co-signed about $50k of student loans for my niece. She graduated and got a job but says she can't repay. My parents get soc security and have some retirement income from my dad's job. they no way have or will have the money to repay this loan if my niece defaults. What happens?

If this is a private loan, you would have to be sued first before any garnishment could happen. Only federal loans can garnish without taking you to court.

You should have has loan written into your divorce agreement that it was his responsiblity. Without that, you have no grounds to sue him.

Submitted by SOAPLADY on Mon, 11/15/2010 - 08:16


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I co-signed a private citibank student loan for my daughter, she was paying for like two years, but went into default when she lost her job. My daughter is now out of the country, the banks calls me like four to five times a day. I cannot afford to pay this loan back. I am so worried and don't know what to do. Could the bank garnish my wages, and what are the consequences i should expect. Should i call the bank back and actually speak to their representative. I am so afraid of could happen to me.

Submitted by on Mon, 11/22/2010 - 20:09

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I co-signed my son's student loans, and now it is back to me to pay since he is not able to make the payment. They want a stilment of $46,000 up front or a payment on a $95,000, either way, I cannot meet their demand, so now my credit is gone, how or where can I get help I am willing to make payment, but not on a 95,000, I can't aford that.:confused:

Submitted by on Sun, 01/02/2011 - 09:01

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i am 62 y o, cosigned for son's loans, he stopped paying, i've been paying for last 4 years. I'm now retiring, will not have money to pay, own no real estate, income will be social security and pension. can i be garnisheed or can my income sources be attached?

Submitted by on Wed, 01/05/2011 - 09:25

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[COLOR=black]I got a unique question which is a nice twist to what most people have been asking here. I co-signed a student loan (It's a private loan) for my best friend years ago. He makes decent money and pretty much refuses to pay it (big surprise) and I already know I'm 100% as liable as he is. I've been keeping up with minimum payments so it doesn't hurt my credit.[/COLOR]

[COLOR=black]Here's the twist. I typed up a very long document with dozens of supportive documentation about me suing my best friend for the full amount of the loan if he does not pay it with on time payments within a certain time frame. I also got him and myself to sign this in front of a notary. I pretty much just made a promissory note to a promissory note. I already talked to an attorney about this. He said that I did the right thing and this documentation I can provide is a legal binding contract. I am kind of hesitant because he didn't have much knowledge about small claims court and stuff. I realize even if I sue and win I still have to pay off the student loan but do you think I have any chance at this? Thanks. [/COLOR]

Submitted by johndoe1917 on Fri, 01/07/2011 - 08:47


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I have claimed bancruptcy and have bad credit. My citibank private student loan is a huge problem. Bankruptcy did not delete my citibank private student loan. I have a co-signer as well and do not want her to get involved. What are my rights? what can i expect? I have payed 9,000 to the dept. and the principle has not gone down. I owe 42,000.

Submitted by on Thu, 01/27/2011 - 15:45

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:(:(I co-sign with my son a student loan. I find out now after five years later he hasn't paid the loan on a regular basis and what was $10,00o is now, $17,000. I'm being called daily concerning this matter for me to pay back the loan which is in default. I don't want to be sued or have a lien on my home. They are asking for a setttlement to be paid in full not making payments. Is it true i can't start making payments I have to pay in full.

Submitted by on Tue, 02/15/2011 - 19:53

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If you have the capability to pay or settle the loan off in full now, it would be in your best interest to do so. Defaulting on the private loan is a nightmare....the monthly pays will be high, with the goal to get this paid off in a short amount of time. On top of that, private lenders do actively sue even when payments are being made. Go for the settlement and minimize the damage already done to your credit.

Submitted by SOAPLADY on Wed, 02/16/2011 - 02:56


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Reading this thread it looks like there is not point to ask a question. Soaplady has only one answer which doesn't really help. What is the point of commenting if you only say one thing? I know that I am legally liable as a cosigner. Most of the people know that anyway. The questions is what can be done to help the cosigner?
Please don't give a useless answer that I am fully liable for a loan. I know that.
Morality is not as issue here. We can definitely dig dipper and ask why do banks give 20,000 dollar loans to someone who makes 30,000 a year and has already owe 40,000 on his credit cards. Is it because the really want to you to go school or they are just thirsty for extra cash?

My advise to everyone here is definitely consult an attorney. The are plenty law firms that will offer FREE legal help. NEVER disregard a summons. You have 20 days to respond if you dont you will have to pay. Also they can only garnish your wages if you have been employed for one year not less. There is a limit on how much they can garnish - about 25%.
And again talk to a layer and never listen to what the load companies are telling you unless they are offering you a 30% settlement. Then take it and consider yourself lucky.
Your credit will be damaged anyway if you already getting phone calls.
The goal here for a cosigner to catch them on their mistake. That is your only option. The law is equal for everyone and they have to follow it the same way as you.

Submitted by on Sat, 04/16/2011 - 11:49

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Sorry you dont like my answers but private student loans are pretty cut and dry. THese are prom note based and both the guarantor and lender get copies from day losing a prom note is rare.Plenty of law offices offering free legal help?? You are dreaming....there are contingency agencies that will take on the cases when there are FDCPA violations but for a cut and dry lawsuit cases when the prom note is present, well no one can fight that....the agreement is black and white.

Why did you cosign without asking these questions first? There are a lot of students who borrow responsibly and pay them back on time. Personally I blame the cosignors who are usually parents....,if they said no, maybe the student would have thought about making better educational choices that didnt require private funding. Sorry, but I wont sugar coat....I saw too many ill prepared students and parents in my office looking to borrow, regardless of the fact degree program they were enrolling in would probably not lead to gainful employment.

Submitted by SOAPLADY on Sat, 04/16/2011 - 13:09


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My husband cosigned a private loan for our son. He has completed school, and refused to pay. We thought we had read at one point if they made payments for a period for tow years, without default, we would be able to remove my husbands name. Is this true, and if so, who would we contact? Our son has an income tax return that he could put down a nice amount, but refuse , says he has to live on it. We are at at loss. Any suggestions.?

Submitted by on Wed, 04/27/2011 - 07:41

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Just joined this forum and so far no one is addressing suing the actual person who took out the loan. Thanks so much for providing hope when you mentioned you took your niece to court and won. My only question is, you had to pay the full amount before you took her to court? This must have been difficult to sue a family member. My husband is in the same situation and is considering suing a family member.

Submitted by on Wed, 05/25/2011 - 10:00

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The cosignor DOES take out the loan ...they hold the same legal liability as the student.

It is fiction that anyone is sucessful in suing the first party of the loan. A cosignor signs the prom note of their own free will....unless they can prove they signed it under duress even attempting to sue the other party is a waste of time and money.

Submitted by SOAPLADY on Thu, 05/26/2011 - 14:34


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Same situation. My husband will be paying for his daughters student loans well into retirement. We wrote her off. She doesn't exist to us! At least we know she will never mooch anothr dollar out of us, and she is struggling! (Which we chalk up as Karma, what comes around..goes around.) We have no choice to pay, fine. Bujt she better NEVER come knocking at our door. Door closed...bolted shut when it comes to her. She's a loser for throwing tha loan, 30,000.00 on my husbands lap. Menace to society I say!

Submitted by on Wed, 06/01/2011 - 03:10

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SoapLady, Ihave a question about paying back a defaulted private student loan. I've spoken with DCS and I'm trying to get a payment plan together (they are offering one) but they won't give me any numbers that don't involve a downpayment without getting financial information from my co-signor. Is there any way to force them to give me numbers for a payment play that doesn't involve 8,000 down on a 15k loan? I'm unemployed but can do some of the monthly payments they've offered (with downpayment) but I'm not given the option without involving the co signor.

I'd like to say that I've gotten student loans my whole life. This is my very first private loan and I did it after UG and a JD. I blame my fin aid office, they did not explain the difference to me AT ALL. They handed me the loan and said I should pay it back quickly because of the rate. I'd love to see a lawsuit brought for having important terms about repayment and responsibilities buried in the fine print. It would be based on a sound legal theory that's tried and true. In my situation, had I know that they could not be consolidated with fed loans I would never have gotten one. My serious regret is having my father co-sign. He has (or had :( ) excellent credit-how much will it affect his credit? His score is really high and he has two mortgages which he pays on time, pays all his bills on time. I'm hoping he won't be that badly hit. I'm sad but ok with suffering the consequences, just wish he didn't have to.

SoapLady doesn't have the friendliest bedside manner, but she's still assisting you so just take it and appreciate the help.

Submitted by on Sun, 06/05/2011 - 00:40

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Without cosignor info they do not have to offer a payment plan at all. This is a private loan....they dont care about affordability. And even if you do come to some meeting of minds, they will probably end up suing both of you anyways....that is just the way privates work.

As for suing anyone else, dream on. On every private and federal loan prom note I have seen there is the phrase (or something similiar) "I will not sign this note unless I have read and understand the terms." With a cosignor, this means that two of you have sign under the same statement.

Submitted by SOAPLADY on Sun, 06/05/2011 - 03:53


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Hi I'm the person above. Thanks for your help.

So even if we do a downpayment with a payment plan they will still sue us? Why would they do that if they are getting their money? Also I was paying this loan and got 3 months behind, but was still paying it. There was a whole bunch of confusion on one payment and I ended up going in to default, would this help my cause to not be sued? I had a checkered past with citibank but I was def paying on that loan regularly and on time.

When they go to sue is that the point they can garnish wages? Would they be able to garnish wages of my co-signor as well? I'm not clear what suing enables them to do that they can't do now and what the incentive is for them to sue me if I start making payments? Also could you please answer my question about the damasge to my co-signors credit? I know it will be the same as me but if he already has good credit and many existing loans that are way more than this would it really hurt him as much as somebody like me with no credit history?

Thank you!

Submitted by on Sun, 06/05/2011 - 08:56

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Hi another question,

this is a 15,000 loan through citibank, if I can put 2,000 down would they still want to sue? If they plan to sue will they tell you? The woman I talked to told me that I was lucky I called back because they were planning to re-evaluate on monday and I can "stop" it somehow. Do you think she's referring to suing? If I do manage to come to some agreement with them regarding payment plans and suing can I trust them to hold to that? I really wish I could take the 10,000 deal they offered, only 2/3 of the debt and it would be done with. All my other loans are federal. Oy vey.

Submitted by on Sun, 06/05/2011 - 09:19

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Hi again, please ignore my previous two posts, I've been reading up on here and have answered most of my questions, :)

What remains is the question about putting money down to avoid being sued/no money down. In another post you said they sue to protect their interests, which is understandable, but if I put a larger amount down say 5,000-6,000 on a 15,000 loan would they still be inclined to sue? Also if they say they won't sue can I trust that or could they still end up suing?

They offered 10,000 to settle it--do you think they'd be willing to go a little lower? Say 8,000? That amount I/my co-signor could probably scrape together between the both of us.

Submitted by on Sun, 06/05/2011 - 09:52

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Thanks for your help. If they take me and my co-signor to court is it possible to still settle/do a payment plan at that point? If my co-signor receives a pension from a state/local govt can they garnish that? Also are they inclined to empty your bank account if you are willing to do a payment plan?

Submitted by on Mon, 06/06/2011 - 08:25

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Settlements once sued are usually not a generous because court and legal fees are applied to your account. That can add an aditional $1500-$2000 to your account.

Even making payment they can still wipe out payments. That is the power of a judgment. Whether or not they can seize a private pension would depend on your state exemptions.

Submitted by SOAPLADY on Mon, 06/06/2011 - 15:37


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Hi there,

I'm a television news producer, I'd love to touch base with you about this topic, we're doing a story about student loan co-signers.

If you'd like to email me my email is:

Submitted by on Mon, 12/10/2012 - 22:08

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