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Will Chapter 7 bankruptcy affect co-signer of my private student loan?

Conway, AR |

I am considering Chapter 7 bankruptcy. I do not plan on attempting to discharge my private student loan. I have never been late or missed a payment on this student loan. If this private student loan is not a part of the bankruptcy, will the bankruptcy affect my the co-signor on this particular student loan?

Attorney Answers 5


Even if you wanted to discharge the student loan, you would probably not be able to. You could almost literally count on one hand the number of people who have been able to discharge a student loan. You should list it as part of your debt load, it could help your position in the Bankrkuptcy. The only thing that should affect your co-signor is you not paying. You may want to go back and look at the documents you signed for the loan to see if there is anything pertaining to bankruptcy, but as long as you're current it should not be an issue.

Every legal matter is fact specific, and there are often nuances in every case. This is intended for comment only, and does not create an attorney client relationship.

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1. You must list the student loan on your bankruptcy.
2. It wont be discharged unless you prove hardship. Almost impossible to do.
3. As long as it is being paid, co-signer is not affected.
4. Bankruptcy doesn't prevent getting additional student loans if you otherwise qualify.

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To answer your question, the fact of a filing of a chapter 7 bankruptcy itself does not in and of itself affect the co-signer. It is when you stop paying or default that the lender will then look to the co-signer for payment. The student loans must be properly scheduled in your bankruptcy filing regardless of whether or not you plan to take the additional step of an adversary proceeding to determine undue hardship. Retain an experienced bankruptcy attorney in your jurisdiction to avoid costly mistakes and later 'fix-its'. Here are some basics: BLUE LINK BELOW

Law Offices of Andrew D. Myers, North Andover, MA & Derry, NH provide answers for informational purposes only. Actual legal advice can only be given by an attorney licensed in your jurisdiction, thoroughly familiar with the area of the law in which your concern lies. This creates no attorney-client relationship.

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Yes, it can. Some lenders will, as soon as you file bankruptcy, immediately go after the co-signer for payments, regardless of whether you have never missed a payment. Federally guaranteed student loans are not dischargeable in bankruptcy unless there is a hardship. However, a private (nonguaranteed) loan, such as a bar study loan or several others, are dischargeable because they are not tied into the federal student loan guarantee program. Talk to your co-signer. If you still want to be responsible for the loan, the lender and your bankruptcy atty can arrange for you to sign a reaffirmation agreement whereby you reaffirm the loan and continue making payments. If the lender insists on going after the cosigner, you can make arrangements with the cosigner that if the lender comes after them, you will continue to make the payments (which can always be paid online). Just be sure the loan is included in your bankruptcy schedules. Your bankruptcy atty can advise you on all this.

No attorney-client relationship is established with this answer. It is not to be considered legal advice, but is merely given to point you in the right direction and give you a general answer as to the law regarding the question you have asked.

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The advice already offered in this venue is good. Student loans, in general, cannot be wiped out or discharged in a Ch 7 bankruptcy. There is a method to request the Court to allow the discharge of some or all of your student loan debt , but that process is expensive and many times does not really help unless you are medically disabled or meet a very strict standard. In a Ch 7 context, a creditor can choose to go after a co-signor if there is a default on payments of the debt. If you are current on the student loan debt at the time of filing the Ch 7, then there should be no reason for the creditor to pursue your co-signor. There is no real need to ask to have the debt reaffirmed in a Ch 7 due to the fact that it is already, by law, non-dischargeable. You generally only reaffirm debts that would otherwise be discharged in the Ch 7. Just to be clear, reaffirming a debt applies to debt that would be discharged in your Ch 7 unless you specifically ask for it to survive your bankruptcy, such as a car or a house that you are wanting to keep and continue paying for. If after the Ch 7 is discharged, then all of your listed unsecured debts (those debts not tied to specific collateral) will be discharged, so in theory you would have a better ability to continue to make the student loan payments.

I notice that you use the term "this private student loan" in your question. You most definitely must list ALL of your debts in your bankruptcy schedules, private or otherwise. Bottom line should be: if you are current at the time of filing the Ch 7 BK, and you remain current after the filing of the Ch 7, then your co-signor should have no worries or fears. Any language in loan documents that makes the filing of a bankruptcy an event of default is not enforceable. Generally, the only time the student loan creditor can go after the co-signor is in the event of a default on the debt, such as non-payment. If you stay current, then you should not have any problem.

I represent people in the Conway area, so if you want to take advantage of a free consultation, please contact my office, 800-377-0764 - O.C. "Rusty" Sparks

Specific legal advice should be taylored to each individual client when the attorney knows all the facts and circumstances of your case. Answers to a LinkedIn question is not to be considered "legal advice" and answering the question does not create an attorney/client relationship. The answer should be used for general consideration and not relied upon or acted upon as specific advice to your question posted in this forum.

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