What can Sallie Mae collect against a co-signer if the loan has gone into default?

I make the mistake of co-signing back about 3 years ago for my son to attend school. I was informed at the time that once he was employed and after 2 years, I’d be off the agreement. Well, my son is still unemployed and I’m no longer employed (on social security). Next year, the Sallie Mae monthly payments will double and frankly I cannot justify payments when they do. I need to know what damage they can do when I stop payments? My wife is an employed school teacherbut did not sign the agreement. We reside in WA state. We own our home valued at about $250K.

Asked on September 2, 2011 under Bankruptcy Law, Washington

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

If you co-signed your som's school loan, you are also obligated on your son's loan if he fails to make payments on it. This is the problem when one co-signs a loan. Many people co-sign loans without realizing that ultimately they could be responsible for paying back the loan where the person for whom the loan was obtained defaults upon it.

The liability that you could be responsible for is the amount remaining on the loan plus accrued interest. Additional concern could be your responsibility for attorney fees and court costs.

You should consult with an attorney about asset protection for you concerning the current situation and the best way to try and resolve it.

Good luck.

 


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