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Dave Kennett
Dave Kennett, Lawyer (JD)
Category: Legal
Satisfied Customers: 27689
Experience:  25 years experience in general law, including real estate, criminal, traffic, and domestic relations
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My daughter in law has a student loan for 27 thousand dollars

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My daughter in law has a student loan for 27 thousand dollars at 6.50 apr. I co signed the bank note. She lost her job and I am making her payments. I want to borrow from my line of credit at 3.50 percent and pay off her total student loan. Now I can deduct the interest from my line of credit on my irs taxes each year which I could not do by paying the bank directly. I lost 1800 dollars in interest paid in 2012 because the student is NOT my dependent, but is a daughter in law. She will pay again when you gets another job and is able to. In the meantime, what kind of promisory note do I need to get her to sign to show she is the real owner of the debt and owes me the full amount of 27,000 which I will pay off for her. And I will keep making future payments until she is able to. Thanks.
Dear JACUSTOMER - You would simply need a general promissory note that would state "in consideration of the payment in full of my student loan by (your name) I agree to pay (your name) $.......... by (date) at (interest rate)". Then she would sign the note. You can usually find on line sites that will provide forms for a low cost that will suffice. Keep in mind that a student loan cannot be discharged in bankruptcy however once you pay it off and have an unsecured note with your daughter in law she could file bankruptcy and have the debt to you discharged. If you want more protection you would need to have some security for the loan such as a real estate mortgage. I'm not certain if your daughter in law has any available assets with which to secure the note but that would be the way to have some security other than her promise to pay.
Customer: replied 4 years ago.

Thanks for the quick reply. Should I get my son to also sign the note with her?

It certainly wouldn't hurt. The more security the better.
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