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  1. #1
    Join Date
    Aug 2010
    Posts
    8

    Default Co-Signed Private Student Loans and Bankruptcy

    My question involves collection proceedings in the State of: Missouri

    I will likely be filing for bankruptcy in the coming days and while I was adding creditors to my Schedule F, I was reminded that two of my private student loans with SallieMae were co-signed by my mom. Both loans are in repayment and they are both current.

    Now, I understand fully that all student loans, public and private, are not dischargable in bankruptcy without a showing of "undue hardship." However, what will happen, administratively speaking, with these two loans when I file?

    I've read conflicting things -- some say that SallieMae will temporarily transfer the account out of the Debtor's name and into the co-signor's name, until the Debtor is discharged, at which time the loan will be transferred back into the Debtor's name. Some say that SallieMae demands full payment from the co-signor. Some say nothing happens as long as you're current.

    Which is it? Anybody had experience with this?

    I'd call their call center and find out, but the folks in Karachi aren't usually very helpful and usually give blatantly false information.

  2. #2
    Join Date
    Sep 2010
    Posts
    19,670

    Default Re: Co-Signed Private Student Loans and Bankruptcy

    YOUR bankruptcy has no effect on the cosigner. They don't need to "transfer" anything, they just stop pursuing you and start pursuing the other party. If the loan is current, I don't know why they would call it as long as *SOMEONE* continues to pay.

    All that is probably moot because I doubt your loans are going to be discharged in the proceedings. Undo hardship would be that you were unemployable and faced with ongoing expenses (like medical or caring for children) that would preclude you being even minimally solvent coming out of the bankruptcy if you had to pay them.

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