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Student Loan Balance Reported as Zero After Cosigner's Bankruptcy

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  • 03-22-2011, 10:50 AM
    JudyDixon
    Student Loan Balance Reported as Zero After Cosigner's Bankruptcy
    My question involves bankruptcy in the state of: Illinois

    My father co-signed on a private student loan (TERI, through American Education Services) for me in 2003. I began making payments on it in 2006 and was never late on a single payment. In July 2009, I received a notification from AES that my balance was $0 and the status was listed as ‘CLAIM PAID’ due to bankruptcy (my father’s Chapter 13 bankruptcy I found out from him later). I asked my father if it was because of his bankruptcy; he claimed that it wasn’t and what they were doing was ‘illegal’.

    I called TERI, but they only have a recording on which you can leave a message for them to call you back. I permanently reside abroad, but I left my information in a message for them in the hopes that they would at least contact me via email. A month went by and they didn’t call me back. Over the last year and a half I have sent them 4 e-mails, which they also have yet to respond to. I have asked my father (who lives in the U.S.) to help me out (forward any mail that comes to his house, refer anyone who calls, ask his bankruptcy lawyer), but he avoids the subject or promises to help and then doesn’t. I have also not been able to get my own credit report because all of my credit cards, bank accounts, etc. are foreign, and can’t access the PACER public records system to get the details of his bankruptcy for the same reason.

    He did finally admit last week that my loan is included in his bankruptcy and e-mailed me 2 statements that include that he is paying on my loan (listed on his payment record as ‘National Collegiate Trust’. However, my loan and his lawyer’s fees excluded his unsecured debt amounted to about $9,000. If I had known his plans and had been able to remove him as co-signer before he filed for bankruptcy, would a judge have approved his bankruptcy on claims of $9,000? In other words, is it likely that my father knowingly deceived me in order to claim chapter 13 bankruptcy?

    Also, I would very much like to continue making payments on this loan (however destroyed my credit may be by now). I have never been contacted by TERI, AES will not give me any information other than the phone number for TERI, and the only number I found for National Collegiate Trust went to someone’s personal voicemail.

    I certainly admit that I have been at fault for not pursuing this problem more aggressively over the last year and a half, but I am considering moving back to the States within the next year. I want to solve this problem as soon as possible and in any way possible.

    Do I have any other avenues before hiring a lawyer in the U.S.?

    If I do hire a lawyer, what would they be able to do for me (in terms of both tracking down my loan and getting the details about the bankruptcy that I am apparently involved in)?

    Thank you very much for any help you can provide.
  • 03-23-2011, 08:51 PM
    Mr. Knowitall
    Re: Student Loan Balance Reported as Zero After Cosigner's Bankruptcy
    The cosigner's bankruptcy should not have any impact on the borrower's liability. We don't know what happened or what your father may have done, and we have no way of investigating this for you. If your father won't or can't tell you want is going on, and his bankruptcy lawyer similarly won't or can't explain, consider consulting a lawyer of your own.

    I have no idea what you believe your father deceived you about, or why. Perhaps you can better explain what you're thinking.
  • 03-24-2011, 01:48 AM
    JudyDixon
    Re: Student Loan Balance Reported as Zero After Cosigner's Bankruptcy
    Thanks Mr. Knowitall for responding to my post. When you mentioned:
    Quote:

    Quoting Mr. Knowitall
    View Post
    The cosigner's bankruptcy should not have any impact on the borrower's liability.

    I understand that I am liable for the loan until it is paid off, however do you mean that the loan (which was in good standing before the bankruptcy) should not have automatically defaulted due to my co-signer's bankruptcy?

    Quote:

    Quoting Mr. Knowitall
    View Post
    I have no idea what you believe your father deceived you about, or why. Perhaps you can better explain what you're thinking.

    Would my father have 'needed' my loan (which was at a balance of $17,000 at the time of the bankruptcy) for a judge to approve his chapter 13 bankruptcy? Aside from my loan, he only had about $9,000 in unsecured debt.

    Also, if I do hire a lawyer, what would they be able to do for me (in terms of both tracking down my loan and getting the details about the bankruptcy that I am apparently involved in)?

    Again thank you very much for any advice you can provide.
  • 04-08-2011, 08:46 PM
    aeloo85
    Re: Student Loan Balance Reported as Zero After Cosigner's Bankruptcy
    @JudyDixon

    It is very interesting reading your situation. My sister in law is in a VERY similar situation so I understand how frustrated you must be. Her father also filed Bankruptcy - Chapter 13 and included her Student loan in which he had cosigned for her. She was making regular payments but then he told her that he was filing bankruptcy and his attorney advised her to stop making her payments because it would be taken care of in the bankruptcy. Long story short, her account is now in collections and the bankruptcy is showing on her credit report even though it was her cosigner that filed, not her. Her mistake was listening to her father and his attorney and stopping her payments on her loan. She is now trying to figure this all out and is having a hard time getting any information out of anyone. Like you, if she would have found out about the bankruptcy sooner, she could have removed her father as her cosigner and avoided this whole mess. (He was already too far into the bk process when she found out her loan was going to be included). The bank won't talk to her and her fathers attorney wont talk to her. She also feels that her father decieved her when he included her loan in the bankruptcy as well, because it doesn't make sense of why he needed to do so. She was taking care of it with no problems before this.

    I am wondering if you have gotten anymore information about your situtaion figured out. I know you said you don't live in the states, but do you still have a social security number? and would that be enough for the credit bureaus to provide you with a credit report, or atleast information about the last time your credit was reported on?

    I work in the credit counseling industry and would really like to be able to help out my sister in law with her situation. I think I have a good understanding of most issues, but hers and yours have a lot of different circumstances.

    I advised her that I thought hiring a lawyer would be a good option, just to get someone else involved that might be able to find out more information and get people to atleast talk to her so she knows what is going on. But like you.. I wonder, what a lawyer would actually be able to do.

    I hope everything works out for you.
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