What are my rights if I co-signed for a Student loan for a friend and they defaulted in the payments?
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What are my rights if I co-signed for a Student loan for a friend and they defaulted in the payments?
I co-signed on 2 student loans for an ex-girlfriend. We spilt up and when that all happened I tried to sell everything that both our names were on so we were not liable for anything. She refused to sign off on the house and vehicles therefore I could not sell any of it. I filled bankruptcy last year and was told I could not include the student loans. She has not paid on them at all and they are now in collections. What should I do because back when I co-signed them it was for to use for school and she did not use the money for school.
Asked on October 1, 2011 under Bankruptcy Law, Michigan
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 12 years ago | Contributor
1) As to the loans themselves: if you cosigned for them, the lender has the right to go after you for payment if your ex-girlfriend did not pay them. Student loans are only rarely, if ever, dischargeable in bankruptcy, and only in cases of extreme hardship, so it probably is the case that you could not include the student loans in your filing. The fact that your ex-girlfriend did not use the money for school does not affect your obligation to pay.
2) As your ex-girlfriend: you should be able to sue her for the money you have paid for or towards the loans; anything the lender is trying to get from you; and possibly for other compensation, too. She is likely liable under two theories: breach of contract, for not meeting her obligations; and fraud, if she got you to co-sign the loans under false pretenses (e.g. that she would use them for school). You should consult with an attorney about seeking compensation from her.
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