Co-signed student loan- Sue the borrower?

[athena53]

I think it would be better to join Facebook, gather all the "friends" possible over a few months, until there are thousands.
Then start posting about how the student loan is not being paid.
Of course, make sure the privacy settings are such that the niece and mother cannot respond easily and have a THICK skin.

And set up a GoFundMe account to pay the loan back?

 

[sheehs1]

I wonder why some are questioning if there is an agreement between OP and niece about paying the money back...
.

It is because had they had an agreement, signed and notarized between the two of them, then the OP would be able to at least get a judgement easily and/or go after her personally. It would provide more choices for getting the money back and would have protected the OP a bit more for their willingness to co-sign her loan.

 

[Winenot]

Something to look into: if you have not yet paid the loan off, you can offer the bank payment in full in exchange for an assignment of the note to you. In other words you buy it from them similar to how mortgage companies sell notes to each other. The benefit is that you now own the debt outright and can take any number of actions to collect. One option would be to turn it over to a collection service. This strategy will likely only work if the loan was taken through a bank and not the student loan program. Also, if the debt is already paid off, it probably was stamped paid and they likely no longer have the documents. I used to work at a bank and we would occasionally have co-signers request to purchase the note. We always accommodated these requests. Lastly, regardless of the route you take to collect, you need to be mindful of the statute of limitations. Your time to take action is limited by law.

 

[ivinsfan]

Something to look into: if you have not yet paid the loan off, you can offer the bank payment in full in exchange for an assignment of the note to you. In other words you buy it from them similar to how mortgage companies sell notes to each other. The benefit is that you now own the debt outright and can take any number of actions to collect. One option would be to turn it over to a collection service. This strategy will likely only work if the loan was taken through a bank and not the student loan program. Also, if the debt is already paid off, it probably was stamped paid and they likely no longer have the documents. I used to work at a bank and we would occasionally have co-signers request to purchase the note. We always accommodated these requests. Lastly, regardless of the route you take to collect, you need to be mindful of the statute of limitations. Your time to take action is limited by law.

If you do this and are unable to collect any money, does the bad loan turn into a tax deduction?

 

[Winenot]

If you do this and are unable to collect any money, does the bad loan turn into a tax deduction?

That would be a question for an accountant. Might be able to file a 1099-C with the IRS, though. The niece would then owe taxes on the unpaid loan, which is considered income to the IRS.

 

[candrew]

Another example of that old saying "a good deed never goes unpunished".

Ugh.

OTH, the OP's niece will find out eventually that Karma can be a real b*tch.

 

[Hermit]

Something to look into: if you have not yet paid the loan off, you can offer the bank payment in full in exchange for an assignment of the note to you. In other words you buy it from them similar to how mortgage companies sell notes to each other. The benefit is that you now own the debt outright and can take any number of actions to collect. One option would be to turn it over to a collection service. This strategy will likely only work if the loan was taken through a bank and not the student loan program. Also, if the debt is already paid off, it probably was stamped paid and they likely no longer have the documents. I used to work at a bank and we would occasionally have co-signers request to purchase the note. We always accommodated these requests. Lastly, regardless of the route you take to collect, you need to be mindful of the statute of limitations. Your time to take action is limited by law.

This is the only response that, IMHO, could have a chance at a legal remedy.

Sent from my Moto G (5) Plus using Early Retirement Forum mobile app

 

[Texas Proud]

It is because had they had an agreement, signed and notarized between the two of them, then the OP would be able to at least get a judgement easily and/or go after her personally. It would provide more choices for getting the money back and would have protected the OP a bit more for their willingness to co-sign her loan.

But I do not think something signed would be any different than the position OP is in now... going to court he would be able to get a judgement and have all the remedies with a signed piece of paper...


To me there are only two things that it could be... a loan or a gift... since OP did not give the money outright and niece signed saying she would pay it back it is easy to show it was a loan.... I doubt any judge would rule otherwise...



I would not hold back from going to court because I did not have a signed agreement... for other reasons maybe...

 

[joeea]

I wonder why some are questioning if there is an agreement between OP and niece about paying the money back...


Well, YES... she was supposed to pay the bank... so OP making the payments will not be deemed to be a gift... so I think the default in court would be that it is a loan... niece would have to have some evidence if she wanted to claim it was a gift...

That's no how cosigning works.

 

[Bamaman]

Something to look into: if you have not yet paid the loan off, you can offer the bank payment in full in exchange for an assignment of the note to you. In other words you buy it from them similar to how mortgage companies sell notes to each other. The benefit is that you now own the debt outright and can take any number of actions to collect. One option would be to turn it over to a collection service. This strategy will likely only work if the loan was taken through a bank and not the student loan program. Also, if the debt is already paid off, it probably was stamped paid and they likely no longer have the documents. I used to work at a bank and we would occasionally have co-signers request to purchase the note. We always accommodated these requests. Lastly, regardless of the route you take to collect, you need to be mindful of the statute of limitations. Your time to take action is limited by law.

That was exactly what I was thinking. She cannot go bankrupt on a student loan owed to a bank. But it is unknown if she could go bankrupt on a student loan purchased by an individual.

 

[ivinsfan]

Bankrupt? She doesn't work and lives on a disability income..I think she's bankrupt proof....

 

[ncbill]

If she & hubby are indeed living on nothing but disability income they're most likely judgment-proof.

 

[Ready2Go]

Pay it off, call it a stupid tax and forget about it. Life is too short.

 

[kgtest]

I'll never forget when my older sister (17 at the time) had to garnish wages from our aunts paycheck she received working for the welfare department for a loan sis made to her.


Yeah read that sentence twice. My sister, had to garnish the wages of our aunt (mom's sister) because she failed to withhold her end of the promissory note.


Never, ever lend to your family...gifting is something different.



Ask yourself, why wouldn't all of the qualified loan analysts and there managers approve the loan at a typical bank? Oh yeah, because the debter is not good for it.


I had a hard time shelling out the dough for my own college education...I'm not sure what it would take me to shell out for a niece or nephew, but I dont think even a gun to the head would sway my ways.


I once had a cousin get super mad at me after not lending her some money once. She had in her mind exhausted everyone that could help...and was now asking me her cousin. It was interesting to see how she acted when I eventually thought it over and said 'no'. My initial reaction was 'man am I glad I didn't loan her a dime?"



Does this sound like your niece?

 

[pmac]

I would chalk it up to a life lesson as well. However, if the OP wants to pursue collection, the best choice is to purchase the note from lender by taking an assignment as some have noted above. That puts the OP in the shoes of the lender, stops the OP from paying additional interest/attorneys fees to the lender.

Once the assignment is complete the OP can then file a collection action against the niece with interest continuing to accrue on the loan and the ability to collect attorneys fees as provided by the note. Since the niece is in HI the action would probably have to be filed in HI unless the note provided for venue in some other jurisdiction. The OP will have to shell out the money to hire an attorney to file suit in order to obtain a judgment.

While obtaining a judgment against the niece would be relatively easy since there appears to be no defense to an action on the note, collecting the judgment is likely to be difficult, particularly from Wisc with the niece is HI.

While I am not familiar with HI exemption and execution laws, there is a high probability that any disability payments are exempt from execution. Normally, once enrolled the judgment would attach to any non-exempt assets. My guess is that the niece has limited non-exempt assets. The judgment will remain in place for whatever length of time that HI law provides, but it can probably be renewed.

At some point the niece may have some assets subject to attachment, but the OP will spend considerable time, effort and money trying to collect on the judgment. The OP might be able to either sell the judgment to a third party for pennies on the dollar or hire a collection agency for a significant % of the judgment amount. If the OP diligently pursues the judgment it is very likely the niece will ultimately file a chapter 7 bankruptcy and discharge the debt before any amount is ever collected by the OP.

So if it were me, I would not throw good money after bad. The lesson here is to never, ever co-sign a note unless you are willing to pay it.

 

[travelover]

............While obtaining a judgment against the niece would be relatively easy since there appears to be no defense to an action on the note, collecting the judgment is likely to be difficult, particularly from Wisc with the niece is HI.............

For a thousand bucks, I know a guy who would break both her legs. Cheaper and probably more satisfaction in the end.

 

[Music Lover]

Pay it off, call it a stupid tax and forget about it. Life is too short.

Some people rely on others just "forgetting about" loans or being too nice to demand payment. I wouldn't lose sleep over it, but I also wouldn't just let them off the hook as if it never happened. It only proves to them that their bad behavior will be rewarded and will likely pave the way for them to take advantage of someone else in the future.

 

[athena53]

At some point the niece may have some assets subject to attachment, but the OP will spend considerable time, effort and money trying to collect on the judgment. The OP might be able to either sell the judgment to a third party for pennies on the dollar or hire a collection agency for a significant % of the judgment amount. If the OP diligently pursues the judgment it is very likely the niece will ultimately file a chapter 7 bankruptcy and discharge the debt before any amount is ever collected by the OP.

But if the OP can purchase the note and, after diligent efforts to collect, gets nothing, that's a tax-deductible bad debt, right?

 

[joeea]

I wouldn't lose sleep over it, but I also wouldn't just let them off the hook as if it never happened.

Okay, so you indicated what you wouldn't do. So what would you do?

 

[14thMed]

OP here, Breaking her legs sounds good.
I sent my DS a semi-nasty text asking what we were going to do. She said she would set up a payment plan. That remains to be seen!
She also sent niece several nasty texts, which never worked in the past.
To the people who mentioned mental illness, yes there has to be some. However it doesn’t stop my niece from driving around in a luxury car!
I did pull out the original paperwork,the loan originally was for 10k and thanks to the miracle of compound interest it is now22k. 7.2 % interest. Al

 

[kgtest]

Some people rely on others just "forgetting about" loans or being too nice to demand payment. I wouldn't lose sleep over it, but I also wouldn't just let them off the hook as if it never happened. It only proves to them that their bad behavior will be rewarded and will likely pave the way for them to take advantage of someone else in the future.

My mom's younger brother just hit her up for $100 he had loaned to her about 20years ago.


His timing was impeccable. He decided to wait 20 years until his sister's husband passed away, and they were all at sis's to help her get through the tough time.



I mean honestly, what better time to ask for that money that is owed when everyone is in one room mourning the death of a loved one.


It was highly effective, my mom and her sister were so sad they both paid up lol.


The kicker...her bro has 2 pensions, and he's been retired since he was 45. I literally will not help this guy when he gets old enough to need it. He has no children, and I am the youngest male in the family besides my son...soo yeah bad move on his part lol. He lost all compassion over a supposed $100 debt from 20 years ago.


There's a time and a place.

 

[Hermit]

My mom's younger brother just hit her up for $100 he had loaned to her about 20years ago.


His timing was impeccable. He decided to wait 20 years until his sister's husband passed away, and they were all at sis's to help her get through the tough time.



I mean honestly, what better time to ask for that money that is owed when everyone is in one room mourning the death of a loved one.


It was highly effective, my mom and her sister were so sad they both paid up lol.


The kicker...her bro has 2 pensions, and he's been retired since he was 45. I literally will not help this guy when he gets old enough to need it. He has no children, and I am the youngest male in the family besides my son...soo yeah bad move on his part lol. He lost all compassion over a supposed $100 debt from 20 years ago.


There's a time and a place.

At least he didn't ask for interest...

 

[Music Lover]

Okay, so you indicated what you wouldn't do. So what would you do?

At the very least, I'd tell people and make regular demands to be paid back.

 

[flintnational]

Something to look into: if you have not yet paid the loan off, you can offer the bank payment in full in exchange for an assignment of the note to you. In other words you buy it from them similar to how mortgage companies sell notes to each other. The benefit is that you now own the debt outright and can take any number of actions to collect. One option would be to turn it over to a collection service. This strategy will likely only work if the loan was taken through a bank and not the student loan program. Also, if the debt is already paid off, it probably was stamped paid and they likely no longer have the documents. I used to work at a bank and we would occasionally have co-signers request to purchase the note. We always accommodated these requests. Lastly, regardless of the route you take to collect, you need to be mindful of the statute of limitations. Your time to take action is limited by law.

If this can be accomplished, it is an excellent solution. The OP, as a co-signor, is on the hook for the loan anyway. This would at least give the OP a legal right to collect. I would run this solution by an attorney. The cost should not be much since you only want the attorney's opinion regarding the deal structure and if the right to pursue the debt can be transferred. Yes, you might need the attorney later to collect but that is another issue. I would seek to strengthen your legal position first. Without a written agreement between the parties, IMO, the OP is currently in a weak legal position to pursue the niece.

 

[Sunset]

Since the original debt was 10K and interest has ballooned it to 22K , I'd suggest offering the bank 15K to buy the debt in cash.
Basically knock some of the cost off, while getting the debt.

After all, OP could die, move to Argentina , be bankrupt , and any number of factors that mean the bank is not getting their money.