Can Student Loans Be Included In Bankruptcy
If your primary borrower starts missing payments or payment due dates however the lender will contact you. Normally by the time the lender is contacting you the loan youve co-signed is already past due and your credit rating may have already taken a hit. Keep in mind too that any legal remedies a lender has at its disposal for pursuing a loan debt can also be applied to the co-signer. These legal remedies include assignment of the delinquent loan account to a debt collection service and a possible court action. For delinquent federal education loans the government may seek to garnish your wages or seize any income tax refunds you have coming your way. In addition delinquencies or a default on any loans on which youve co-signed will appear on your own credit report with all the same adverse effects as on the primary borrowers credit report.
As the suspensions of both federal and private student loan programs keep spreading through all types of lenders - large and small; for-profit and nonprofit; banks non-banks and credit unions; state loan agencies and schools-as-lenders - students and their families are finding themselves with fewer borrowing options to get the parent and student loans they need to pay the fall tuition bills that are coming due over these next few weeks. Two Major Lenders the Latest Casualties of Student Loan Crisis The Brazos Group a primarily nonprofit group of higher education lending servicing and other financial aid companies first announced that it would stop offering federal ollege loans back in March. In May however after the government passed the Ensuring Continued Access to Student Loans Act Brazos once again began offering federal parent and student loans saying that the governments short-term liquidity plan had renewed the organizations confidence in its ability to continue offering student loans.
Most Popular This Week
Under current credit criteria most students who typically have little or no established credit history will require a co-signer in order to qualify for a private student loan. Typically a co-signer is a relative who agrees to pay the balance of any co-signed loans if the student fails to repay the loan although a family relationship is not a requirement. A student may have an unrelated co-signer. Federal Student Loans vs. Private Student Loans Government-backed federal student loans come with certain payment-deferment and loan-forgiveness benefits. Borrowers who are having difficulty making their monthly loan payments may be eligible for up to three years of payment deferment due to economic hardship along with an additional three years of forbearance during which interest continues to accrue but no payments would be due.
Without any special dispensations from the lender private student loans will generally remain in repayment until the note is satisfied or charged off as a default no matter how long the repayment process takes. The Legal Implications of Co-Signing on Student Loans A loan co-signer has all the same legal responsibilities as the primary loan borrower and has a legal obligation to repay the loan debt under the same terms as the primary borrower. The co-signer is really a co-borrower and is equally responsible for repaying the co-signed loans. Unfortunately too many co-borrowers realize this truth very late in the game. If youve co-signed on someones loans and your primary borrower makes all of her or his payments on the loan on time and as planned you may never hear from the lender.