Get Out of Debt Guy

My Parents Cosigned for My Private Loans and I Can't pay

Posted May 22, 2014

WRAL Reader Question

Dear Steve,

Single again Divorced parent of 2 not receiving child support (currently $75,000 owed). I received my college degree and in order to finish my degree I took out student loans. I am a working and bring home around 2250 a month and am not able to pay my student loans. I keep trying to tell the Student Loan companies that I do not have the money to pay but they insist on me paying.

It is mostly my private loan companies that I struggle with. I am thinking about bankruptcy as an option but do not know where to turn. My parents cosigned for my private loans but I do not want my inability to pay to affect their credit. My parents are not able to help paying for my student loans either.

I would like to know if filing for Bankruptcy is the best option for my family?


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Dear Denise,

The good news is for the federal student loans there are good options. Click here.

Unfortunately your desire for your private student loan situation to not to impact others is a wish, not a reality. The reality is the lack of child support payments impacts your ability to meet your loan payments. Child support money should be used to support the children and this would free up your income to service the loans. Go after the deadbeat dad.

When your parents cosigned for your loans they knew they would be responsible for the loans and repayments. If you don't pay the credit report will reflect your payment history on their credit report. If you fail to pay the collector and lender will go after your parents because that's what your parents agreed to. Lenders don't ask for cosigners for any other reason that to obligate others for the loan.

If you have other debt that is holding you back from making your student loan payments then filing bankruptcy makes logical sense to free up income.

What you might want to do is talk to a local bankruptcy attorney and discuss if bankruptcy is right for you, chase the deadbeat dad, and ask your parents to help with the private student loan payments.

You can claim all you want that you can't pay your private student loans and the general reaction is going to be "too bad, so sad." If these were federal student loans you'd have all sorts of good options. But you say these are private student loans. In that case there are no long-term income contingent repayment plans and your payment is your agreed payment.

I am seeing more people reaching lump-sum settlements with private lenders when they are significantly delinquent. Unfortunately since there are cosigners the lender will probably pursue them first, up to suing them. The private student loan settlements are in the 50 percent range and are proactively offered by the lender in some situations. Monthly payment settlement for private loans is very rare at this time.

There are some limited cases in which private student loans can be easily discharged in bankruptcy, read this.


Steve Rhode
WRAL Get Out of Debt Guy

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About this Blog:

Steve Rhode has had careers in opthalmology, real estate and as the head of a nonprofit debt counseling firm. On his blog, he offers hard-won, free advice about getting out of debt, consolidation and making the right choices as you manage your money.