Can I sue my dropout daughter for the student loan I co-signed?

Dear Penny,

Like many parents, I co-signed a student loan for my 18 year old daughter when she started college last August. In October, I found out that she had stopped going to class and was no longer working on any homework. She left the dorm and entered with a girlfriend.

Now she has $ 20,000 in student loan debt and does not have a job. She is supposed to be looking for a job in retail right now. When her loan goes into repayment and she doesn’t make the payments, I guess I’ll be held responsible.

I am disabled and live on Social Security Disability. I am unable to repay his loans. Do I have to sue her if it is about the fact that she does not repay the loan?

-A.

Robin hartill [ The Penny Hoarder ]

Dear A.,

Unfortunately, 18-year-olds don’t always make the wisest decisions. This is one of the reasons student loans get dirty so quickly. When you’re barely an adult, it’s hard to fully appreciate the long-term consequences your decisions will have not only on your own finances, but often on someone else’s.

I’m afraid you are correct that you will be held responsible for your daughter’s student loan. When you agreed to co-sign, you became just as responsible for this debt as your daughter. And it’s also likely that a lender will come after you first. You might not have a lot of income, but you still have more than your daughter.

Since you co-signed, I’m assuming these are private student loans. (Federal student loans usually don’t require a co-signer.) This makes this situation even more difficult, as your options are much more limited with a private lender than with the federal government.

You would need to speak to a lawyer specializing in contract law to determine if suing your daughter would be an option. However, even if you could sue her, I don’t think that’s the way to go. Suppose you got a judgment against your daughter. It hardly makes sense if she has no money to raise. During this time, you are still obligated to pay with the lender.

I would be mad at your daughter if I was in your situation. But realistically, you’re probably not going to get anywhere with your daughter if you start from a place of anger. Make it clear to him how disastrous his actions could be for your finances. Tell your daughter that her loan payments could prevent you from paying basic expenses and that her decisions could destroy your credit.

Try not to focus on the disappointment you feel about her decision to drop out of school here. The point here is to get him to help with the payments. Given the labor shortages we hear about every day, your daughter should be able to find an entry-level job if she’s actually looking for it.

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You might suggest that she let her move in with you so that she can start reducing the balance on that $ 20,000 loan. He may not like it at first. But I guess without a job or income, she will quickly exhaust her welcome with her girlfriend.

In the meantime, you should contact the lender and discuss your options. Be prepared to provide documents showing that you have little income and are disabled. Although a private lender is not required to make accommodations, they may be willing to do so if you can prove your inability to pay. Getting something is usually better than nothing, especially if they can avoid the time and expense of taking you to court. The National Center for Consumer Law Student Loan Assistance Program is a good resource for understanding your options.

If all else fails, I would suggest contacting a lawyer to find out if it is possible to get this debt discharged. Student loan debt is rarely dischargeable, even in bankruptcy. But this is possible in some cases if you can prove undue hardship, usually due to a disability.

You cannot reverse this decision. But what you can do is learn from it. Unless you can afford to take charge of the payments, there is no way you can afford to co-sign a loan.

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Robin Hartill is a Certified Financial Planner and Senior Writer at The Penny Hoarder. Send your sensitive money questions to [email protected].


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