If I co-signed a student loan, is it better to have a personal contract between the borrower andI over defaulted payments or canI just sue?

UPDATED: Sep 13, 2011

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If I co-signed a student loan, is it better to have a personal contract between the borrower andI over defaulted payments or canI just sue?

What if the person moves away, how easy is it to collect payments if borrower is late on the personal contract?

Asked on September 13, 2011 under Bankruptcy Law, California


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

As a cosignor, you could sue the borrower on the loan agreement or note itself in the event of default, since you are one of the parties to the contract. However, there may be advantages to having a separate agreement between you and the borrower, since in that agreement you can do such things as:

1) Require him/her to pay legal fees and court costs if you have  to sue him or her.

2) State that in the event you have to sue, you may  bring the action in your local court--e.g. you identify the specific courthouse which the borrower consents to have the matter heard in.

3) You can provide for late fees or interest if the borrower defaults.

4) You can specift that the law of your state (or any state you like) will apply.

In short, while it's not necessary to have a separate agreement, there are some advantages to it.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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