Can a bank call in the loans if they find out the co-signor has dies even though the loans are current?

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Can a bank call in the loans if they find out the co-signor has dies even though the loans are current?

My grandfather co-signed my students loans for me and recently passed away. The estate wants him released as a co-signor. I have been paying on these loans for 18 months and they are current.

Asked on April 23, 2015 under Estate Planning, Massachusetts

Answers:

M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 6 years ago | Contributor

I am so sorry for your loss.  Your question is very intuitive and frankly, you could be in default now and not know it.  Lenders can place you in default even if you are current when a co-signatory passes on.  Please get a hold of your loan documents and read them. And if they can call it in then find a new co-signor NOW.  It is unlikely that with only 18 months of payment history the lender will let you take the debt on yourself.  Good luck.


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