If I co-signed a student loan, is it better to have a personal contract between the borrower andI over defaulted payments or canI just sue?
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If I co-signed a student loan, is it better to have a personal contract between the borrower andI over defaulted payments or canI just sue?
What if the person moves away, how easy is it to collect payments if borrower is late on the personal contract?
Asked on September 13, 2011 under Bankruptcy Law, California
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 12 years ago | Contributor
As a cosignor, you could sue the borrower on the loan agreement or note itself in the event of default, since you are one of the parties to the contract. However, there may be advantages to having a separate agreement between you and the borrower, since in that agreement you can do such things as:
1) Require him/her to pay legal fees and court costs if you have to sue him or her.
2) State that in the event you have to sue, you may bring the action in your local court--e.g. you identify the specific courthouse which the borrower consents to have the matter heard in.
3) You can provide for late fees or interest if the borrower defaults.
4) You can specift that the law of your state (or any state you like) will apply.
In short, while it's not necessary to have a separate agreement, there are some advantages to it.
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