What is my recourse regarding a loan that Itook out for family memberif they no longer want to pay?

We took a loan for my father and my mother to purchase a mobile home in GA about 15 years ago. They files bankruptcy so they could not take a loan on their name. 5 years ago my father passed away, so my mother was paying that loan. Now last month, she told me that she does not want to pay anymore because her social security check and my father’s retirement check has been reduced. I did favor for them not my mother decided to default it but the loan is on my name and my wife’s name. What is the recourse?

Asked on September 3, 2011 under Bankruptcy Law, Georgia


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

Unfortunately, if the loan is in your name, it does not matter whether it was "for" your parents or not--it's your loan, and if you don't pay, you will be the one the banks come after, and you will be one whose credit is ruined. There is no way to get out of the loan without the bank agreeing to let you out, and there is no reason the bank would let you out of your lawful obligation--you clearly owe them the money, the bank can look to get it from you, and the bank doesn't care that it was for your parents.

You may be able, if you can show that you then loaned the loan proceeds to your parents and they agreed to repay them, to sue your mother for the money she in turn owes you. Of course, even beside the fact that no one wants to sue their parents, if she is only receiving social security and retirement funds, her income may be exempt from garnishment, making her effectively judgment proof--though you may be able to put a lien on her mobile home. Could you possibly get her to take out some form of loan or mortgage on her home and use its proceeds to repay your loan?

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