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  1. #1
    Join Date
    Jul 2007
    Posts
    3

    Question Co-Signer of a Federal Student Loan Approaching Default

    I'm looking for some advice on behalf of a 77 yr old woman living in washington state who was duped into co-signing for her rotten son's federal student loan about 4yrs ago. She didn't realize there was even loan until about 2 yrs ago when he missed a payment. The son lives in arizona and quit paying on the loan about 6 months ago and now Salie Mae is threatening imminent default on his mother and she is extremely upset and does not know what to do. The payments are about $250/mo.

    She recieves: a pension of $1,250/mo; has a tax deferred retirement account which currently has $60,000 - from this she draws $300/mo; she owns a small house worth about $100,000. Thus, her total income equals $1,550/mo which covers her expenses with little left over. Without the money from her retirement account she couldn't afford to make ends meet.

    She can not afford to take over the payments, and cannot afford an attorney. Is her pension, retirement account, or her home in jepordy?
    Can all or a portion of the loan be dissmissed through a hardship claim?
    Are there any options for her?

    Any advise would be greatly appreciated!

  2. #2
    Join Date
    Apr 2007
    Location
    Il.(near StL,Mo.)
    Posts
    5,252

    Default Re: co-signer of a federal student loan approaching default

    As co-signer on the loan, mom is just as responsible for the loan as her son. If she can't pay & they get a judgment against her, they can seize all assets that are non-exempt from seizure in her state.

  3. #3
    Join Date
    Jul 2007
    Posts
    3

    Question Re: Co-Signer of a Federal Student Loan Approaching Default

    Thanks! Since your reply I've searched the web trying to figure out if her limited assets would be exempt. Can anyone point me to a site where I could determine which assets are exempt in Washington state?

    Also, I've run across information that indicates that it is possible in some cases to have all or part of a student loan dissmissed due to hardship (It appears that this is not at all easy to do). Does anyone care to guess if it would be a possibility in her situation and how cumbersome the process?

  4. #4
    Join Date
    Apr 2007
    Location
    Il.(near StL,Mo.)
    Posts
    5,252

    Default Re: Co-Signer of a Federal Student Loan Approaching Default

    Washington exemptions:

    Washington Post-Judgment Asset Exemptions


    Homestead: Real property or mobile home up to $40,000. No limit if seeking to discharge debts on failure to pay a state income tax on retirement benefits that were received while a resident of Washington. Must record homestead declaration before sale of home if property unimproved or home unoccupied.

    Pensions and Retirement Benefits: ERISA-qualified plans. Funds exempt for city employees, volunteer firefighters, state patrol officers and public employees. IRA exemptions for conventional, Roth, education, SEP and SIMPLE plans.

    Insurance: Annuity contract proceeds to $250 per month. Group life insurance policy or proceeds. Life insurance proceeds or avails if beneficiary is not the insured. Fraternal society benefits. Disability benefits, proceeds or avails. Fire insurance proceeds for destroyed exemption.

    Personal Property: Appliances, furnishings, household goods, home and yard equipment up to $2,700 total. No limit on any property located within Washington if seeking to discharge debt based on failure to pay a state income tax on retirement benefits that were received while a resident of Washington. Burial plot sold by nonprofit cemetery association. Books up to $1,500. Clothing, furs, jewelry and ornaments up to $1,500. Food and fuel for comfortable maintenance. Keepsakes and pictures. Motor vehicles up to $2,500.

    Tools of Trade: Farm trucks, stock, tools, seed, equipment and supplies of farmer up to $5,000 total. Library, office furniture, office equipment, and supplies of physician, surgeon, attorney, clergy or other professional up to $5,000 total. Tools and materials used in another's trade up to $5,000.

    Miscellaneous: Business partnership property.

    Wages: Greater of 30 times federal minimum hourly wage or 75% of debtor's weekly disposable earnings.

    Public Benefits: Unemployment benefits. Industrial insurance (workers' compensation). AFDC. Crime victim's compensation. General assistance. Old-age assistance.

    Wild Card: $1,000 of any personal property, with a limit of $100 for cash, bank deposits, bonds, stocks and securities.

  5. #5
    Join Date
    Jul 2007
    Posts
    3

    Default Re: Co-Signer of a Federal Student Loan Approaching Default

    Thank you for all of the information!

  6. #6
    Join Date
    Apr 2007
    Location
    Il.(near StL,Mo.)
    Posts
    5,252

    Default Re: Co-Signer of a Federal Student Loan Approaching Default

    You're welcome.

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