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Thoreau (T-USA)
Thoreau (T-USA), Attorney
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I co-signed an education loan with Sallie Mae for my step-daughter.

Resolved Question:

I co-signed an education loan with Sallie Mae for my step-daughter. She stopped paying on the loan and my credit is ruined. I applied for a department store credit card and found out about this when I was turned down. Prior to this I had excellent credit. Do I have any recourse, small claims court maybe or am I stuck paying off her loan ($2000.) and stuck with bad credit?
Submitted: 3 years ago.
Category: Legal
Expert:  Thoreau (T-USA) replied 3 years ago.
Hello! I'm sorry to hear about the situation!

When a cosigner is left paying a debtor's debts, the cosigner may generally have a basis to sue the debtor to recover the value of the debts paid and to recover monetarily for the damage done to the cosigner's credit.
However, the unfortunate truth is that a cosigner is still liable for the debtor's debts. So, while a cosigner may the debtor to recover the value of damages, the cosigner is still liable to the lender (both financially and through the cosigner's credit score).

I know that this probably isn't entirely what you wanted to hear. However, it's the honest truth and I know you want a truthful answer above all. I hope that you will click accept so that I am paid for my time and effort spent providing this information.
Customer: replied 3 years ago.
So far I haven't paid anything on the loan, since I was unaware that the account wasn't being paid. I'm guessing that at this point I should pay off the loan to stop further damage to my credit, then take her to small claims court to recover the money I paid on the loan and sue for damages to my credit? I'll have to take the money out of my IRA. Can I also sue to get back money I'll lose by not having that $2000. in my IRA?
Expert:  Thoreau (T-USA) replied 3 years ago.
Thanks for your follow-up!

At this point, you should immediately retain an attorney to represent you in the matter.
Your attorney may find that initiating payments or negotiating a settlement may be in your best interests, particularly considering your IRA situation.
Alternatively, your attorney can help you attempt to compel the borrower to start making payments.
Damages for such matters can include lost interest, damage to credit scores, etc.
That said, it's important that individuals avoid actions that might increase the damages, as they may be unable to recover those damages. Further, the ability to recover damages is also limited by the funds that the original debtor has access to.

Therefore, your immediate next step is to directly involve your attorney.

I know that this probably isn't entirely what you wanted to hear. However, it's the honest truth and I know you want a truthful answer above all. I hope that you will click accept so that I am paid for my time and effort spent providing this information.
Thoreau (T-USA), Attorney
Category: Legal
Satisfied Customers: 9176
Experience: Attorney
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