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TJ, Esq.
TJ, Esq., Attorney
Category: Legal
Satisfied Customers: 12133
Experience:  JD, MBA
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My problem is that I cosigned for my son in the amount of

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My problem is that I cosigned for my son in the amount of $16,000 and after 3 ½ years of him not paying and me having paid $7,209 so far the balance due is now $19,711. Also I got my mother in law to cosign for my son at the same time for the same thing in the amount of around $75.000 and I told my mother in law that she wouldn’t have to worry because if my son didn’t pay then I would, now after 3 ½ years of him not paying and me having to paid $24,348 so far the balance due is now $89,152. The two loan agencies are AES and Great Lakes. The problem being is that my heath and my wife’s is bad and we are struggling to keep up with the combined payments of $831 a month and are going into credit card debit that amount every month because of it. I’m 58 my wife is 63 my mother in law is 83 and disabled and father in law is 80 and disabled. Please, do you have any answers to get us out of this mess? Thanks, XXXXX XXXXX

Hello and thank you for allowing me the opportunity to assist you.

I do have suggestions, but whether or not they make sense in your situation depends on the assets that you and your in-laws have. What kind of assets do you have, and do you have any debts associated with them. For example, do you own a home? If so, do you have a mortgage? How much equity do you have? Also, do you work? What about your in-laws? What kind of income do they have?

I want to get an idea of your financial situation (and your in-law's financial situation). Depending on your situation, you and/or they may be judgment proof, or bankruptcy may be a viable solution.
Customer: replied 4 years ago.


I own my home and owe $208,000 with a 2nd mortgage of $29,000 on a $250,000 home.

I’m a self-employed supplemental health insurance sales agent around $48,000 yearly income. My wife is retired with $167 a month SS benefits.

My In-laws own their home with a $0 balance; they are both handicapped and retired with very small SS benefits of less than $1,000 monthly between them both.

Hi again.


Thank you for the additional information. The homestead exemption in Alaska is $54,000. Bankruptcy may work in your situation because all of the equity in your house can be exempted, which means creditors cannot get at it. This is because you have less than $54,000 in equity. If you were to file bankruptcy, then you could wipe out that, plus any additional unsecured debts that you may have such as credit cards, medical bills, et cetera. Obviously bankruptcy is not ideal, and it is generally considered a last solution. On the other hand, it may do exactly what you wanted to do, which is eliminate the debt and allow you to keep your assets. If you do nothing, and stop paying, then the creditor can eventually sue you and get a judgment against you. With the judgment, the creditor can put a lien on your house, and garnish your wages. So, if your three options are to pay, to stop paying, or to file for bankruptcy, then bankruptcy seems like the best choice. If you would like to go that route, then you should retain a local bankruptcy attorney to assess your case. It will likely cost you around $1500 total for an attorney to file the bankruptcy.


Unfortunately, your in-laws may be in a worse situation. This is because they own their house outright. If the house is worth more than $54,000, then the creditor can go after that equity. Unfortunately, it would not be possible for your in-laws to give the house away, for example to you, in order to protect it. That is considered a fraudulent transfer of assets. If their house is worth less than $54,000, then they too could file for bankruptcy. Assuming, the house is worth more than $54,000, and your in-laws cannot continue to pay the debt, then they may wish to retain a local attorney who can try to work out a settlement with the creditor. For example, it may be possible to grant the creditor a lien on the house, with the understanding that will be paid when your in-laws pass away and the house is sold. That is just an example, but the point is that an attorney may be able to work out a creative solution that allows your in-laws to stop paying and still keep their house at least while they are alive. Obviously that is less than ideal in the sense that they would prefer to simply eliminate the debt. However, the facts may not allow it in this case depending on the value of their house.


Does that answer your question? Let me know if you need clarification, and please remember to rate me positively so that I receive credit for my efforts. Thank you and good luck!

Customer: replied 4 years ago.

One other comment, what if has a no bankruptcy or
death clause in the contract and does it matter if it’s a private or federal

Hi again.

For clarification, is this a student loan?
Customer: replied 4 years ago.

Yes it was a student loan and he has been unable to get a full time job in that field because of no job openings.

Hi again.

Thank you for clarifying, and I am sorry that I did not realize that the debt was student loan debt earlier. That does change my answer since student loan debt is one of the very few types of debts that is generally not dischargeable in bankruptcy. I say "generally" because there is a rare instance where it is dischargeable: If it is an undue burden. Based on what you told me, it would not be dischargeable in your case since you are working and the balance is not too great. It possibly would be dischargeable in your in-law's case because of the balance as well as their age and income, but again, they'd likely lose the house.

Accordingly, forget about my bankruptcy suggestion, as that will not work. In your case, a settlement of some kind is probably your best shot if the goal is to get rid of the debt immediately and reduce the amount owed. The incentive for the lender is that if there is no settlement and you stop voluntarily paying, then it will be stuck garnishing your wages. If the student loan debt is Federal, then it would be limited to 15% of your disposable income (as opposed to the ordinary 25%), so repaying the debt through garnishment could take a very long time. If the student loan debt is private, then it would have to sue first and get a judgment, so it would incur attorney's fees. The lender may be willing to reduce the debt and interest rate in order to be repaid faster and without the hassle.

But I'm not going to downplay the situation. You don't have a lot of leverage since the debt is student loan debt. And from their perspective, the entire purpose of you co-signing on the debt is so that you will repay it if your son does not.

Let me ask you this: Have you and/or your in-laws contacted the lenders to explain this situation and ask for options? If so, what was the response?
Customer: replied 4 years ago.

I have contacted my son about getting me a copy of the contract seeing how I never received one and the company won’t let me see it or talk about it. That doesn’t seem right if I’m responsible to pay and they won’t let me see or talk about the contract. Is that right? Can they do that?

Nether I or the in-laws contacted the lenders yet. So do you think I should explain the situation and ask the lenders to lower the payments or bill or something, do you think that might work?


Hi again.

Q: they won’t let me see or talk about the contract. Is that right? Can they do that?
A: Unfortunately, they do not have to provide you with a copy of the contract, nor do they need to talk to you about the contract. If this ends up going to court, however, then they must provide a contract at that time in order to win their case. Because of that, it is stupid not to provide one earlier if the consumer requests it. After all, why would a person pay on a contract that he hasn't seen?

Q: So do you think I should explain the situation and ask the lenders to lower the payments or bill or something, do you think that might work?
A: I think that it is worth contacting the lenders and explaining the situation and asking what they suggest. I would make it clear that you cannot afford to continue paying, and you may even want to subtly mention that an attorney told you that you are "judgment proof" (though it doesn't necessarily appear to be true in your case since you have wages that can be garnished). But I'd probably say it anyway to see their reaction. Unfortunately, if the loans are not yet in default, then you'll be speaking to one of the regular telephone reps. What you want is the workout department, because they are the people who deal with delinquent debt, and they generally have the power to make deals, etc. The regular phone rep is going to tell you that you have to abide by the contract, and that's that. If the regular phone rep won't put you through to the workout department (or whatever name they give that department in that organization), then you may have to wait until there is a default. The alternative would be to retain an attorney for the purpose of working out a settlement. An attorney's letter will likely find it's way to the right department, and he'd likely get more traction than you would, and faster than you would.

I wish that I could provide you with a way to just eliminate this debt. But that is the problem with student loan debt. Congress, in it's infinite wisdom, decided that student loans should never go away, even if it is a debt that will essentially ruin a person's financial life. I know that's not what you want to hear, but I have to be honest.
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