I have Parents PLUS loans for three children that were co-signed by one of my siblings. Does this debt have any priority in getting paid over credit cards? What is the purpose of advising the trustee that the loans were cosigned. (Another thing my lawyer failed to put on my petition - that there is a cosignor on theses loans). I don't know if it matters but I was court ordered by a family court judge to take out these loans.
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Nope, no priority whatsoever, sorry.
That sucks about a family court judge ordering such a move, that seems over reaching to order someone to incur debt.Last edited by HHM; 03-08-2011, 08:31 PM. -
Could the fact that a family court judge ordered it qualify it as a divorce property settlement or something?
Probably a strectch but I know domestic support is priority.Comment
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Any predictions what will happen with these loans? Will they at least be partially paid from the proceeds of the sale of my home? Where will the proceeds of the sale of my house go first (Mortgage?) and then what debt?Comment
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IF your house does sell, and you are in a C7 you will become an asset case. After your discharge, it may take another year of distribution of assets and costs to clear then you will be closed. The cosigned debt will be discharged (unless it is some sort of divorce settlement, more info please) but the cosigner is on the hook for the signed debt. He/she will have to pay it. 'HubOriginally posted by nohope View PostIf I knew it all, would I be here?? Hang in there = Retained attorney 8-06, Filed 12-28-07, Discharge 8-13-08, Finally CLOSED 11-3-09, 3-31-10 AP Dismissed, Informed by incompetent lawyer of CLOSED status, October 14, 2010.Comment
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The distribution will first to go pay off any mortgage and other secured claims against house.Originally posted by nohope View Post
Then, assuming all the remaining debts have equal priority, then each is paid a pro-rata share. So, if you owe Chase $10,000 and owe Citibank $30,000, and $2,000 is going to be distributed, Chase gets $500, and and Citi gets $1,500
As for the divorce decree issue, not likely. I applaud the creative thinking, but the issue has to do with debt "priority", the only divorce related debts that are given priority are domestic support obligations. However, arguing that the Parents Plus loans are domestic support obligations is a bit of stretch, main hurdle, the creditor is the student lending bank, not a spouse, former spouse, or child.Comment
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Don't know if it matters but the loans we court ordered post-divorce (about 15 years post divorce). Attorneys I had at the time knew I couldn't afford it (if that matters).
So where do the Parents PLUS loans rank in the priority? (I had to get a co-signor for the loans.) Are they the same as the credit cards? How about back income taxes (there is a tax lien on the property from the IRS). Last couple of years have been hell.....
Are all debts after the mortgage treated equally?Comment
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Hi nohope. If you are still reading this thread (2 months after the original post) I am in a similar situation. I am awaiting my creditor meeting in another 2 weeks. My understanding is that the PLUS loans I used to help my son go to college are simply unsecured debts. They have no priority over other unsecured debt such as credit cards.
However . . .
Unlike credit cards, these PLUS loans will not be discharged. So, rightly or wrongly, I have continued to pay the PLUS loans even though I stopped paying on the credit cards some time ago. My logic is that since these loans will survive bankruptcy, I will still be obligated to pay even after discharge, so I don't want interest and/or late fees adding on.
My 2 cents worth.Comment
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Yes, they are not dischargable and it's substantial - it's for three kids.Comment
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