Cosigned loan through Sallie Mae is switching to my dad due to my bankruptcy...

[aaengel]

Hello,

My dad got a letter from Sallie Mae stating they're switching over a cosigned loan to him and are requiring him to repay it...

Now I'm still in the middle of my bankruptcy... can Sallie Mae do this? I thought all of the Sallie Mae loans were supposed to be on hold until I was discharged? (This was the only one that was ever co-signed).

Also, my dad's one fear is that because I'm in bankruptcy, somehow this loan will be marked as being bankrupt and somehow affect his score? Would that be true? I assume it shouldn't effect his score unless he doesn't make the payment and I assume it won't be marked with "bankrupt" or something.

As for after my bankruptcy, can this get switched back to me as being primary? Also is Sallie Mae somehow in violation of the stay for doing this? Can I sue them?

[AngelinaCat]

Yes, Sallie Mae can do that. Once you declare BK, and it looks like your part of that loan is going to be discharged, the co-signer becomes the responsible party. I do not know about credit scores.

There are a couple of other recent threads about this subject, including with Des responding to it. Here is a link:

http://www.bkforum.com/showthread.php?76357-Need-advice-on-Chapter-7

[tobee43]

the loan was co-signed by him so unfortunately the liability of the debt will transfer to him. as a co-signer that's what happens, if the the first person fails to make the payments they go directly to the co-signer for the money. so, yes, they can do that.

now, if you didn't have a co-signer on the loan that would be a different story all together, but they don't have to wait until a stay is lifted if someone is being held responsible...such as a co-signer. hope your intent was to keep the house.

best of luck!

[tobee43]

haaaaaaa....ms cat i didn't see you there!

[AngelinaCat]

haaaaaaa....ms cat i didn't see you there!

Mmmeeooooowwwwwwwwwwww!!! Purrrrrrrrrrrrrrrrrrr!!!

[df04527]

The loan, more than likely, will show up on his credit if they aren't already. Have you checked? SM misses alot except when it comes to reporting they are pretty tenacious.

[Bell30656]

That would be the purpose of a cosigner. Think carefully before you cosign for anyone even a family member. If that family member doesn't pay, you will.

[AngelinaCat]

That would be the purpose of a cosigner. Think carefully before you cosign for anyone even a family member. If that family member doesn't pay, you will.

I heartily concur. I have often told how 'Hub co-signed a car loan for an acquaintance that was down on his luck and had no credit. This wasn't even a friend, just someone we knew, and 'Hub has a generous heart.

When this person started defaulting on the payments, and 'Hub started getting the calls and letters, we made this person surrender the car. Later on we filed bk and included this loan. We suggested that this acquaintance file bk himself. His response: "It costs too much money to file." So he is stuck with a judgment.

[tobee43]

Mmmeeooooowwwwwwwwwwww!!! Purrrrrrrrrrrrrrrrrrr!!!

you know we saved a kitty!!!

[HHM]

Yep, this is a very difficult situation. But a cosigner is a cosigner and unfortunately, the responsibility of being a cosigner is coming home to roost for many parents across the country. 50% of college grades are unemployed or underemployed and average student loan debt is $25,000.

There are no real options for the cosigner, it is either pay or go in default and fact collections.

As to your other questions, first, are you doing chapter 7 or chapter 13 BK.

If chapter 7, yes, you can contact Sallie Mae and try to work something out. No, it is not a violation of the stay for Sallie Mae to contact the cosigner during YOUR bankruptcy.

The "bankruptcy" shouldn't appear on your dad's credit report, but the default status (assuming the loan is in default) certainly would.

If chapter 13, the situation is more problematic. You will not be able to pay the student loans during your BK. It is a gray area whether the auto-stay applies to the cosigner; reason being, in most contexts, student loans are considered non-consumer debt. The "co-debtor" stay in chapter 13 only applies to consumer debts. So arguably, SM could still pursue the cosigner.

[tobee43]

Yep, this is a very difficult situation. But a cosigner is a cosigner and unfortunately, the responsibility of being a cosigner is coming home to roost for many parents across the country. 50% of college grades are unemployed or underemployed and average student loan debt is $25,000.

There are no real options for the cosigner, it is either pay or go in default and fact collections.

As to your other questions, first, are you doing chapter 7 or chapter 13 BK.

If chapter 7, yes, you can contact Sallie Mae and try to work something out. No, it is not a violation of the stay for Sallie Mae to contact the cosigner during YOUR bankruptcy.

The "bankruptcy" shouldn't appear on your dad's credit report, but the default status (assuming the loan is in default) certainly would.

If chapter 13, the situation is more problematic. You will not be able to pay the student loans during your BK. It is a gray area whether the auto-stay applies to the cosigner; reason being, in most contexts, student loans are considered non-consumer debt. The "co-debtor" stay in chapter 13 only applies to consumer debts. So arguably, SM could still pursue the cosigner.

this is so true!