Husband cosigned ex-wife's private student loan. She's not paying. Can he file BK to relieve his obligation
She agreed to assume responsibility for the student loan through the divorce decree. Now she isn't making payments and it's destroying my husband's credit; so badly that we cannot refinance our home (or get credit for anything). We have very little debt, but she has made it apparent she won't pay. How else can he get out from under this?
- NotAnyoneYouKnowLv 71 decade agoFavorite Answer
I'm not being glib or mean, just honest.
The lesson is very clear. Never cosign for anyone.
Thanks to changes in the federal bankruptcy laws, educational loans (whether Staffords, Perkins, PLUS, or private lenders) can not be discharged in bankruptcy.
This is EXACTLY why it's foolish to cosign an educational loan. Anything can happen, and in your husband's case, it has.
By the way - a divorce agreement does not supersede a debt. Neither party (nor the judge) has the right to sign away a lender's right to collect a debt by trying to pass it on to someone else. People throw these things into divorce agreements all the time, but they're really only personal agreements between the parties.
Your husband might have the right to sue his ex to enforce the divorce agreement (check with his attorney), but that doesn't prevent the lender from forcing your husband to pay the loan - they were not a party to his divorce agreement, and they did not agree to release him from his cosigner responsibilities.
I'm really, really sorry.
Edit: The other answer you were given is hopeful and encouraging, but incorrect. Trust me.
- 1 decade ago
As I understand it, your only course of action would be a legal one. Since your husband co-signed on this student loan, he is legally responsible for making payments on it if the other person defaults. However, if you have the divorce decree that states she has agreed to make payments on the student loan, I would contact your legal representative to discuss what the next steps would be to make her pay.
If the loan is for a large amount, I don't believe small claims court would be an option for you and your husband. However, your other option could be to get a release of some kind for the loan since your husband is divorced from the ex-wife. I'm sure the original loaner will require the divorce decree as backup in order to process this.
However, for the time being, you and your husband may still be required to make payments on the loan. Because of that, you may have to prepare yourself for a lengthy process involving meeting with lawyers, speaking to the original institution that made the loan, and probably lots of different phone calls and meetings in order to resolve this.
I wish you and the best of luck. To say that this situation is causing undue stress on your marriage and finances would probably be an understatement.