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socrateaser
socrateaser, Attorney
Category: Bankruptcy Law
Satisfied Customers: 34409
Experience:  Attorney and Real Estate Broker -- Retired (mostly)
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I co-signed for an educational loan through Chase Bank for

Customer Question

I co-signed for an educational loan through Chase Bank for my son. My son and his wife are now freaking out because a collection agency is going after them for payments. The agency wants $1200 per month payments and it is unreasonable since my son only makes $14.00 per hour with a family of 4. This is an uncertified private educational loan and exceeds amounts allowable for a certified loan. My son has no chance of any forseeable improvement in his job and is scared to death that he will be fired because of wage garnishment. Any advice????? Thanks
Submitted: 3 years ago.
Category: Bankruptcy Law
Expert:  socrateaser replied 3 years ago.
This is a big problem. Educational loans, as you may be aware, are generally nondischargeable in bankruptcy, except where the debtor can show undue hardship. Bankr. Code § 523(a)(8). However, if you cosigned the loan, then your son's bankruptcy is irrelevant, because the lender will simply turn to you for full payment. So, unless you have an undue hardship that you could exploit in bankruptcy, then you are on the hook for this debt for the rest of your life, unless you pay it off.

Probably the best deal here would be for your son to try to refinance the loan with some other borrowing power, such as a credit card, or better yet, multiple credit cards. Even if the interest was extraordinarily high, assuming that he made good faith payments for about a year, he could then file for bankruptcy and discharge the debt. Meanwhile, you would be off the hook, because you would no longer be a cosigner. And, your son's good faith rationale for paying off the original loan would be to remove you as a cosigner, which is a reasonable purpose.

Hope this helps.

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socrateaser, Attorney
Category: Bankruptcy Law
Satisfied Customers: 34409
Experience: Attorney and Real Estate Broker -- Retired (mostly)
socrateaser and other Bankruptcy Law Specialists are ready to help you
Customer: replied 3 years ago.
Ok, I am the one that filed bankruptcy, not son. They will have their wages garnished and cannot afford $1200 per month payments on $14.00 per hour. I do not feel you answered the questions nor given any help... especially since this is an UNCERTIFIED loan and EXCEEDS limitations and was used for LIVING EXPENSES AND NOT SCHOOL. What then????
Expert:  socrateaser replied 3 years ago.
I see that you have provided negative feedback concerning my answer -- stating that I didn't read the question. I respectfully XXXXX XXXXX is your original question:

  • I co-signed for an educational loan through Chase Bank for my son. My son and his wife are now freaking out because a collection agency is going after them for payments. The agency wants $1200 per month payments and it is unreasonable since my son only makes $14.00 per hour with a family of 4. This is an uncertified private educational loan and exceeds amounts allowable for a certified loan. My son has no chance of any foreseeable improvement in his job and is scared to death that he will be fired because of wage garnishment. Any advice????? Thanks

The question says not one word about either you or your son having already filed bankruptcy. So, it's not surprising that I wouldn't assume that you had filed bankruptcy in my answer to you.

The fact that the loan is uncertified loan or that it exceeds the amounts for certified loans is irrelevant, because as an uncertified loan, there is no requirement associated with the loan. If the loan was discharged against you in bankruptcy, but not against your son, then he is now liable for the entire loan amount. If the loan was not discharged against you, then there is no change to either you or your son's obligation.

Considering your son's financial condition, the obvious move for him is to file for bankruptcy, because he may be able to discharge his obligation for the loan.

That said, please tell me (1) whether or not the loan was discharged against you in bankruptcy, (2) whether or not your son could reasonably file for bankruptcy, and (3) how much is the unpaid balance of this loan?

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