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Student loan default impact on co-signer

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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?




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.

Sub: #41 posted on Thu, 03/11/2010 - 05:10

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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?

Sub: #42 posted on Thu, 03/11/2010 - 06:06

SOAPLADY SOAPLADY
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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.

Sub: #43 posted on Thu, 03/11/2010 - 09:22

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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.

Sub: #44 posted on Thu, 03/11/2010 - 09:26

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looking for my most recent post...

Sub: #45 posted on Thu, 03/11/2010 - 09:48

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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.

Sub: #46 posted on Thu, 03/11/2010 - 11:48

SOAPLADY SOAPLADY
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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.

Sub: #47 posted on Mon, 03/15/2010 - 18:52

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

Sub: #48 posted on Mon, 03/15/2010 - 19:02

SOAPLADY SOAPLADY
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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?

Sub: #49 posted on Sat, 03/20/2010 - 15:56

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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.

Sub: #50 posted on Tue, 03/30/2010 - 07:20

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