When a student wishes to attend college or university it is not uncommon for them to take out a student loan in order to help pay for their tuition, books and other school-related expenses. Since most of these new students are recent high school graduates, they do not have the credit score necessary to secure a loan on their own accord. In situations such as this, and because they wish to see their child or grandchild get a college education, a parent or grandparent may step in as a co-signer to the loan. Unfortunately, should the student be unable to repay the loan, creditors will go to the co-signers to collect on the unpaid debt.
Such was the case with one student. Despite the fact the lender knew the young woman would be unable to repay the loan, they proceeded to lend her the money anyway as she had her parents co-sign on the loan. When the woman filed for bankruptcy the lenders did not put up a fight, instead they decided to go after her parents, the co-signers. In fact, even when the parents filed for bankruptcy protection in an attempt to have the loan discharged, the lender was able to convince the court that they could and should be forced to repay the loan. In another case, a 90-year-old man was forced to file for bankruptcy after his grandson defaulted on a loan the man had signed on his grandson's behalf. In this instance, as the gentleman was in a nursing home and truly unable to repay the loan, the lender agreed to forgive the debt.
As a general rule, bankruptcy courts and judges do not care whether or not the co-signers were able to spend the money themselves. In addition, many parents and grandparents who have attempted to fight lenders, have found themselves either on the wrong end of an expensive lawsuit or have found that judges will tend to side with lenders. Either way co-signers are often resigned to make the payments on their child's or grandchild's loan.
If you are a Detroit resident and have found yourself forced into bankruptcy due to student loans or other debts which you incurred by co-signing for another individual, we advise you consult with a qualified Detroit bankruptcy attorney at our firm as soon as possible. Our attorneys will be able to review your current financial situation, evaluate the best course of action to pursue and provide you with the legal representation you need during your bankruptcy proceedings. We are here to fight for you.