I'm currently filing for chapter 7 bankruptcy. My parents co- signed for private student loans with me. They've also been helping me make payments when I'm unable. They've now received letters from the trustee stating that they're being taken to court for the amount in payments that have been made during the 12 months before I filed. If a student loan is not dischargable why can he sue my parents? Is my bankruptcy lawyer able to assist with this issue?
The facts you present don't make sense. The student loan company can sue your parents to collect, but I cannot imagine why a bankruptcy trustee would sue your parents on this issue. Suggest your parents consult an attorney. Getting the story third hand is rift with possible misunderstandings. Hope this perspective helps!
I agree with the post by Ms. Bunce. The action that you are describing by the Trustee isn't making sense. The only thing I can think of is the Trustee may be thinking of this as a preferential payment but even that doesn't make sense since you stated your parents are cosigners on the loans. In a Chapter 7 there is no codebtor stay so, of course, they would want to continue to pay the loan. Your bankruptcy attorney most definitely explain this situation to you. Since the attorney would be representing you and not your parents, your parents may need to obtain their own attorney. However, get in touch with your bankruptcy attorney so that you have a full understanding of this.
As attorneys Bunch and Seymour recommend, contact your bankruptcy attorney with your question. You should also provide your bankruptcy attorney with a copy of the letter. A third-hand account of what a letter said is rarely accurate and should not be relied on.
Nels Hansen is a bankruptcy lawyer in Austin Texas and accepts clients in Austin, Georgetown and Pflugerville. We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code and have done so proudly since 1996. The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Answers provided are for general discussion only and are not to be considered legal advice and they do not create an attorney-client relationship.
Are you sure its a co-signed loan rather than a parent's plus loan? If it is a parent plus loan, it is your parents' loan and not yours and any payments that you make on the loan could be considered what is called a 'fraudulent conveyance". If it is a co-signed loan, maybe the trustee does not understand that your parents co-signed the loan for you and you are liable as well. You bankruptcy lawyer can explain to you exactly what the trustee is doing but cannot represent your parents as s/he already represents you.
Please note: I am a licensed attorney in New York. This response is intended only as general commentary. This response is not legal advice and does not create an attorney client relationship.
I agree with the other attorney responses in that we may not have the complete picture. Generally, a trustee would only sue a family member if you have paid back a family member within two years before filing bankruptcy under what is known as a preferential payment. Creditors are all treated the same in bankruptcy and if you've paid a family member back the trustee can go after that family member to recoup the funds paid to them. Maybe it's because you've given them money so they can pay the student loan? This would make more sense of why the trustee would be going after them.
This answer is to be considered general advice and may not be the actual law in your jurisdiction. It also does not constitute an attorney-client relationship or privilege.
Prior answers have covered a lot of important points in response to your question. I will chime in regarding what can happen if there is in fact a viable claim against your parents (putting aside the question of what the basis may be). If the trustee has a basis to go after your parents and claw back money from them, you can make an offer to settle that claim to get them out of trouble. If you come up with a fraction of the amount the trustee is going after, and offer that money to the trustee in exchange for a release of his claims against your parents, you may be able to get this problem taken care of. Most people want to protect their co-signers in a situation like this.
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