QUESTION
Is it possible for a parent to get out of a co-signed student loan, now that the child has quit college and is working full time?
Asked on Jul 27th, 2011 on Contracts - Minnesota
More details to this question:
I co-signed two student loans for my oldest daughter in 2007. My ex-wife didn''t want to, stating since my credit score was most likely better than hers, and better chance for daughter to get loan. Daughter quit college 2 weeks into her second semester. After the 6-month grace period of no longer going to school, loans came due. She refused to pay, stating she didn''t have money. I ended up making a couple payments, but it became to much with my own credit card and living expenses, and ended up filing bankruptcy 2010. Student loans aren''t able to be written off by bankruptcy, so an agreement was made with company on a payment plan. However, I can''t get my ex to pay her portion of student loan that we signed in divorce agreement, so daughter and I are splitting the payment. I have struggled with medical issues the past two years, and would like daughter to take over making payment, but she won''t as long as I am a co-signer. I would like to get back on my feet financially.
1 ANSWER
William/J Joanis
These are the facts, as I understand them. You co-signed your daughter's student loan. Your ex is responsible on the student loan as well, as part of your divorce. Your daughter dropped out of school and has decided to not pay the loan. You filed for bankruptcy. Let me address each of those matters. When you co-signed the student loan, you became obligated to repay it if your daughter didn't. There is no forgiveness of the loan because your daughter dropped out of school. Your daughter isn't paying it, and the student loan company has the right to collect it from you. You filed for bankruptcy and decided that the loan was not discharged. You may or may not be correctt. When you filed for bankruptcy your student loan obligation was discharged or not based on whether the repayment would be an undue hardship. For most people, repayment of a student loan is difficult, but they can still repay it and maintain a basic standard of living. (It is a very high standard to prove to win on undue hardship.) If a debtor wants the bankruptcy court to tell them if the loan was discharged as part of the bankruptcy, the debtor can bring an action asking the court to declare the student loan to be discharged. The court does not make it dischargeable. It makes a declaratory judgment that it finds that the student loan was discharged. If no action is brought, most people assume the loan was not discharged, but that is just an assumption. A state court could find a student loan to have been discharged in a bankruptcy case, or the debtor could go back to the court, have the case reopened, and asked the bankruptcy court to make a decision. This recently happened in an 8th circuit case I have discussed on my web site. And finally, if your ex was suppose to pay as part of the divorce, you could consider going back into the family court and have the court order it. We handle those cases as well.
Answered on Sep 24th, 2011 at 8:41 PM