Can I really be penalized if my co-signer files for bankruptcy, but I have been making my payments as scheduled?
Question Details:
My dad co-signed for my undergrad loans. When I graduated I made my payments in a timely manner. I recently went back to school so my undergrad loans were deferred but I was still making monthly interest only payments. My dad filed for Chapter 13 but had to withdraw the petition because he was laid off from work in the process and would be unable to meet any agreed upon payments. Now a collection agency is calling me stating that my loans had been taken over by a new lender and that I need to pay it off now. They are saying there is no way for them to set up a long term payment plan.
Your dad's Chapter 13 would not have affected a student loan in any event, even if the case wasn't eventually "withdrawn" as you state. It sounds like something else is going on here. Why would this be assigned to a collection agency if you are current with the payments? And if your loan is deferred (and they granted the deferrment) I similarly don't understand how it can be assigned to a collector.
This is really an issue of contract and other state law, perhaps in addition to specialized student loan laws. I don't think it has anything to do with bankruptcy.
Mark J. Markus, Attorney at Law
Handling exclusively bankruptcy law cases in California since 1991.
http://www.bklaw.com/
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