What Happens when Cosigner Defaults

[PaulfromMa]

My question involves collection proceedings in the State of: MA/MD
I am a resident of MA, my son is in MD. In '07 I cosigned several Sallie Mae private loans for son totalling around $50K. In addition, he got another $20K FFELP loans. He completed the courses on late '08, then decided the field did not provide the employment options he expected. Since then, he has been bouncing around waiting tables, bartending, basically broke. He has already defaulted on the Fed loans, which they discharged and turned over to collections. I took over the Private loan payments in '09, and have been current since. For the past year, my finances have gone downhill, and I have been paying "interest only" per agreement with lender. However, I'm to the point where I need to quit making payments altogether. I assume that Sallie would attempt to make arrangements for payment with son (primary borrower), then come after me when they determine he is not going to cooperate. What typically happens at that point?? What options would a collection agency have relative to my meager assets? I do own my primary residence, but am retired. I live on a tiny pension and a few small savings accounts for my expenses. Just trying to figure out what to expect. If you need any other info to form an opinion, just ask. Thanks in advance.

[Mr. Knowitall]

If the borrower does not pay and the cosigner does not pay, the lender may pursue the borrower and/or the cosigner for the money that remains due.

[PaulfromMa]

Thanks...I assumed that. Was looking for a bit more detail on the "pursue" part. What assets can a collection agency actually put "liens" on?? Or do they actually have to file a suit in court to obtain access to bank account information? What about the personal residence, is that subject to the proceedings as well? Sorry, just trying to understand the process!

[jk]

the first thing they have to do is sue you and obtain a judgment.


here is a site that answers your questions regarding the process and what they can attach or seize for a judgment.

http://www.mainelegislature.org/legi...tle14ch502.pdf

[flyingron]

They can't put liens on anything. They can take you to court and get a judgement and then they can hit your bank account and lien property. They won't likely be able to force you out of the house, but they will get paid after any senior liens when the house is sold for whatever reason.

[PaulfromMa]

Thanks for the info, folks. JK: The link appears to be the legal process after a court judgement is issued, correct? Also, that document is for Maine, I am in Mass....assume there is a similar legislation here.

[jk]

Thanks for the info, folks. JK: The link appears to be the legal process after a court judgement is issued, correct? Also, that document is for Maine, I am in Mass....assume there is a similar legislation here.

while there might be, it would be merely a coincidence.

I apparently need to review the official state postal abbreviations. Sorry about that. I would love to blame it on Google since when doing a search, they often toss in similar pages (which is what actually happened) but it is my fault for not catching it.

but you are correct, to take any action to collect on the debt, they would have to first obtain a judgment.