I am sorry that you are going through this please work with a contracts/ business attorney in your area many will handle it on a contingency fee basis, take care.
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You should review the note and loan to see if your parents guaranteed the loan in their personal capacities. I am not sure what type of insurance you are referring to, but you sue the entity or person owning the insurance and then the entity or person informs the insurance company of a claim. You should consult with an attorney to see if there are other options.
Sorry to read of this situation and hope you can get repaid.
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You need to retain an attorney to evaluate and assess your situation and determine how best for you to proceed. The strategy will differ depending on what the promissory note states, whether you secured some assignment or lien position in connection with paying off the IRS taxes, whether you filed a UCC-1 financing statement or took some collateral, and whether you secured personal guarantees or individual signatures. All these factors will have to be evaluated.
Insurance generally will not cover this sort of contractual commitment. I suspect that the insurance to which you refer would be general liability insurance. General liability insurance does not ensure that the obligor on a promissory note repays the note.
The statute of limitations for collection of debt is generally four years, so you need to consider retaining an attorney soon.
Promissory notes must meet certain requirements. The Note must meet those requirements. If the Note meets those requirements, you may sue the school, but the school may not have assets to satisfy any judgment, thereby making the right to sue meaningless. The question should be if you have any alternative claims against its owners. Some attorneys will take this on a contingency basis. You should seek a commercial litigation attorney to review the documents and advise you of your rights.