We get it. You want to Co-Signing Private Student Loans or feel like you should anyway. After all, you want to help anyone in your family get an education and it’s just co-signing. If they make all the payments, everything will be fine. The reality is that co-signing these loans can put you in a place where bankruptcy will be your only option.
Part of the problem is that the co-signer requirement generally comes up with private student loans rather than federal ones. Federal loans are eligible for all kinds of programs and both temporary and permanent solutions. Private loans on the other hand are eligible for almost nothing. If things go sideways with a private student loan and you are left holding the bag, you will likely have no tools to deal with the situation other than paying the loan yourself, attempting to negotiate the total (here they hold all the cards because it is a non-dischargeable debt) or file Chapter 13 bankruptcy to keep them at bay for five years.
Here are some other reasons why you don’t want to touch these loans. If you end up having to take over the payments, doing so will likely severely hamper the quality of your eventual retirement. Late payments can hurt your credit score and you won’t know if the payment has been made on time.
Since you aren’t eligible for any programs and there aren’t really any federal protections to stop collectors, they will sue you and your co-signer just as quickly as a collector would come after you on a credit card with a massive balance. The only upside here is that private student loan collectors are often more amenable to settling private student loans at the litigation stage. The downside is they will still be looking for monthly payments that you may not be able to afford.
Unfortunately, this expansion in co-signed loans is a growing phenomenon. In 2004, the number of people, sixty and older, coping with student loans was less than 700,000. Today that number is well over 3 million. The average amount borrowed has roughly doubled.
Schedule a Free Consultation with our Experienced West Virginia Bankruptcy Attorneys
If you are contemplating co-signing a loan or you already have, please set an appointment to meet with one of our West Virginia bankruptcy attorneys in Wheeling, WV. There may be solutions for dealing with the private student under the bankruptcy code. If you haven’t co-signed a private student loan for a relative, but are thinking about it, we are happy to talk to you about it, free of charge. Thomas E. McIntire & Associates, LC can help you with filing for Chapter 7 and Chapter 13 bankruptcy. We will be there every step of the way to help navigate you through the often-complex and difficult bankruptcy process.
Give us a call at today to schedule a free consultation with one of our West Virginia bankruptcy attorneys. If you have any other questions about bankruptcy, one of our attorneys will be more than happy to offer advice on your particular situation.