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  1. #1
    Join Date
    Jan 2013
    Posts
    3

    Default Co-Signer Filed for Bankruptcy

    My question involves collection proceedings in the State of: MA.

    Hello,

    I was hoping to get a bit of legal advice on the following:

    In 2008, my Fiances co-signer, on a private student loan, filed for bankruptcy. The lendor almost immediatly placed the loan into "CLAIM PAID", the balance listed as $0, and the loan was then placed into the hands of a debt collector. In the promissory note, it states that this can happen if either the debtor or co-signer files for bankruptcy.

    Since this happened, the debt collectors have been calling both the debtor and co-signer requesting payment on the loan. This makes sense as both parties are equally responsible for the loan. However, as of recently the co-singer has been calling my Fiance, the debtor, asking for updates and at times threathing to sue if the debtor does not handle the full amount of the debt to be paid off.

    This is the ONLY loan the debtor has in a state of this type. It is in this state because the co-signer filed for bankruptcy. All of the other loans are being paid off as a loan should through the original lendor. Payments are, and have been, made to the debt collector on a schedule. The debtor is also working to resolve this issue but the progress has been slow as it is not easy to aquire an additional loan, or forms of money, to cover this one.

    Does the co-signer have grounds for suing the debtor?
    Can the co-signer pursue the debtor to resolve the issue as soon as possible?
    I have also heard that if a loan is defaulted on, a certain number of payments agreed upon by the lendor and debtor can take it out of a default status and return it to normal, is this true?

    Any information would be greatly appreciated.

    If needed, I can provide some additional details. I will say that at this point in time, I do not know what type of bankruptcy the co-singer filed for, whether or not that matters at this point, and if the loan was covered in that same bankruptcy. Given that student loans are non dischargeable, I will assume it was not.

  2. #2
    Join Date
    Apr 2009
    Location
    Somewhere near Canada
    Posts
    35,894

    Default Re: Co-Signer Filed for Bankruptcy

    If the co-signer has filed for bk protection, the lender really needs to quit contacting the co-signer immediately.

    Student loans CAN be discharged. Private loans are more easily dischargeable, but even government loans can be discharged if the debtor can meet the criteria of the Brunner Test.

    The co-signer has no reason to sue your fiancee.

  3. #3
    Join Date
    Jan 2013
    Posts
    3

    Default Re: Co-Signer Filed for Bankruptcy

    Dogmatique, thank you for your reply.

    Unfortunately, I do not know the circumstances of the bankruptcy surrounding the co-signer. This is something I am actively pursuing.

    Based on my research online, I assume that in order for the loan to be covered in the bankruptcy it would have had to be included in it by the co-signer. It is more than likely that the co-signer did not attempt to discharge these loans for unknown reasons. Based on my conversations with the co-signer, his credit is actively being impacted by the loan in question. I do not know the validity of these statements made by the co-signer.

  4. #4
    Join Date
    Sep 2005
    Location
    Behind a Desk
    Posts
    98,846

    Default Re: Co-Signer Filed for Bankruptcy

    If the cosigner is being contacted by debt collectors over an obligation that was discharged against the cosigner in bankruptcy, the cosigner can seek to enforce the discharge order through contempt proceedings in the bankruptcy court. The cosigner cannot discharge the loan - only the cosigner's obligation as guarantor.

  5. #5
    Join Date
    Jan 2013
    Posts
    3

    Default Re: Co-Signer Filed for Bankruptcy

    Mr. Knowitall, thank you too for replying to my question.

    If we approach it from the angle that the loan was not discharged in bankruptcy, how much ground does the co-signer have in suing the original debtor? I want to assume that there isn't much ground, given that this situation is a result of the co-signer filing for bankruptcy and that they debtor has continued to retain responsibility of the loan. However, I know that things are never crystal clear and there is always opposite grounds to something.

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