QUESTION
Can we still pay our loan if co-signer of private student loan is filing chapter 13?
Asked on Jan 21st, 2014 on Bankruptcy - Colorado
More details to this question:
My wife has a $10k student loan out with Sallie Mae. Her mother is the cosigner of the loan and is planning to file for chapter 13 next week. We have NEVER relied on my mother-in-law to pay the pill. Although we have mediocre credit scores (not high enough to sign for ourselves), my wife and I are still fully capable of paying the loan on time and in it's entirety. Researching forums results in nothing but speculation. Please advise.
16 ANSWERS
You can continue to pay the loan, although there is a co-debtor stay. That means that the loan company may have some issues about collecting funds from you. That might be a stumbling block, but it is not insurmountable. I have not looked at the loan, but most student loans are not dischargeable, so as long as the funds come from you, you probably won't have an issue. All that being said, just keep paying the loan and see what the lender does. If they send you the money back, or don't apply it to the debt, then you have an issue that you might need to get some help from an attorney with. This is not a big problem as you present it.
Answered on Jan 24th, 2014 at 9:46 AM
It will be in your best interest to continue paying on this loan. In Chapter 13, it is unlikely that your Mother in Law's plan will provide for any payment on this debt.
Answered on Jan 23rd, 2014 at 4:53 PM
bankruptcy Attorney serving Paul, ID
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Paul N. J. Ross Law, PLLC
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You should be able to continue making payments despite a co-signer filing bankruptcy. Her Chapter 13 should also make some payments on the student loan which will help in it being paid down more quickly.
Answered on Jan 23rd, 2014 at 4:15 PM
Bankruptcy Law Attorney serving Austin, TX
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Law Office of Susan G. Taylor
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Don't see why you can't pay you two aren't debtors in bankruptcy.
Answered on Jan 23rd, 2014 at 4:15 PM
You can still pay. Student loans aren't really dischargable in BK anyway.
Answered on Jan 23rd, 2014 at 4:14 PM
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Yes, you can continue to pay and should do so.
Answered on Jan 23rd, 2014 at 4:13 PM
Bankruptcy Law Attorney serving Livingston, NJ
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Law Office of Stuart M. Nachbar, P.C.
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Yes, you can and should. Primary will still be held liable.
Answered on Jan 23rd, 2014 at 4:12 PM
General Practice Attorney serving Coeur d'Alene, ID
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Michael B. McFarland, PA
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Yes. Student loans are generally not dischargeable in bankruptcy - and this applies to both the principal borrower as well as any co-signer - absent a finding of undue hardship, which is very difficult to establish. Since you are not in default, the lender is not yet seeking payment from the co-signer, and should not have a problem with continuing to accept your payments. The only potential issue would involve the automatic stay (applicable to debtors and co-debtors in chapter 13) that could prevent the lender from sending you monthly statements while the bankruptcy is in progress. In the unlikely event the lender refuses your payments, you should put those funds in a separate account, so you have the funds available when any mess gets straightened out.
Answered on Jan 23rd, 2014 at 4:12 PM
Bankruptcy Attorney serving Omaha, NE
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Heineman Law Office
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Yes, your liability for the loan continues.
Answered on Jan 23rd, 2014 at 4:11 PM
Appellate Attorney serving Grosse Pointe Farms, MI
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Musilli Brennan Associates, PLLC
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Yes, you are the primary obligors and can, and should, pay the bill. The bankruptcy, is the guarantee is listed, only will discharge her mother's potential liability ads guarantor, not your wife's obligation.
Answered on Jan 23rd, 2014 at 4:04 PM
Your mother-in-law is supposed to list your wife as a co-debtor on the student loan in her bankruptcy filing, but if she does not have the primary obligation to pay, she does not have to plan for it in her Chapter 13. Your wife would have the benefit of the "co-debtor stay" provided by Chapter 13 which means the creditor could not force her to pay while your mother-in-law is in bankruptcy, but she can voluntarily continue to pay (and should.)
Answered on Jan 23rd, 2014 at 4:04 PM
Chapter 7 Bankruptcy Attorney serving Bronx, NY
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Law Offices of David Brodman
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You can still make voluntary payments on the student loan.
Answered on Jan 23rd, 2014 at 4:03 PM
Deborah F. Bowinski
Yes, you certainly can continue to pay the loan while your cosigner is in her chapter 13 bankruptcy. In fact, it will save you significant interest charges in the Lin run if you are able to maintain the payments and keep the loan current.
Answered on Jan 23rd, 2014 at 4:03 PM
Bankruptcy Attorney serving Walnut Creek, CA
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Alan E. Ramos Law Offices
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You absolutely want to continue to pay your student loan bill. Your wife is the primary borrower and the failure to make those payments will have a detrimental effect on her credit. Her mother's bankruptcy should have no effect on the loan. This answer was provided as a public service to a question posed on the Law Q & A website. The answer is based on the information provided and is limited to those facts. Furthermore, the answer is based on California law and their application to bankruptcy law in California. Additional information could change the context of the question and materially change the answer.
Answered on Jan 23rd, 2014 at 4:03 PM
Yes. Absolutely. You don't want to default on those loans. The lender can't collect more than the full amount. If the loans get paid in the Chapter 13 and you are paying them directly, the balance will be reduced quickly. In some cases, the loans are not paid by the Chapter 13 filer. In that case, you definitely want to make the payment directly.
Answered on Jan 23rd, 2014 at 4:02 PM
There is no speculation. Of course you can pay it.
Answered on Jan 23rd, 2014 at 4:01 PM