If I co-signed for a loan for a family member out-of-state, if they defaulted, can my wages be garnished?

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If I co-signed for a loan for a family member out-of-state, if they defaulted, can my wages be garnished?

It was a private student loan that has since been sent to collections. Can the collection agency garnish my wages before first actively trying to get a hold of my relative, who is also gainfully employed?

Asked on October 4, 2011 under Bankruptcy Law, Arizona

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

Yes, the lender can choose to go after you, rather than the recipient of the loan. Being a co-signor does not make you only a "back up" source of funds, if the recipient does not pay; rather, you are one of the two (or more, if there is more than one co-signor) people that that the lender can go after at will in the event of default; the lender can choose to proceed against any of the signors or co-signers it chooses.

If you are sued or suffer some loss, however, you in turn would have the right to sue the family member who took out the loan, to recover the money that he or she should have paid; therefore, if  you do face any consequences or liability, you should speak with an attorney about recovering it from the signor him- or herself.


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