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My parents cosigned a student loan for a family friend but that person isn't paying loan. This family "friend" needed my parent's help to get a student loan, so my parents cosigned the paperwork. The "friend" stopped going to school, stopped paying the loan, and used the money for other things. The bank contacts my parents that the loan has not been paid and my parents pay it. Does my parent’s credit get hurt by this?
Titania Hell on wheels
Joined: 06 Jun 2008
Location: Rollin' rollin' rollin'
Tue Jul 22, 2008 2:07 pm
If they paid it, that should have saved their credit for the most part. There may be a minor glitch due to the initial default, but the payment they made should have stopped that.
They now need to pursue legal recourse to get the money from the erstwhile student. A court judgement is something he can't hide from - they do not go away, and if he gets a job, his wages can be garnished, etc. A very bad way to begin one's so-called adult life, IMO, but also a very good lesson to be learned.
Depending on the amount of the loan and the laws of your parents' state, they can take it to Small Claims Court, which is a much faster way than Superior Court.
(I don't watch Judge Judy for nothing.)
JMRazor Baiting Guru
Joined: 03 Mar 2006
Tue Jul 22, 2008 2:51 pm
@Safrina -- this is not a scam. This is a default on a loan. Your parents need legal advice. If they co-signed, they are liable just like the "friend" and yes, this can affect their credit, but more importantly, can affect their assets if they do not pay off the loan. Your parents have a right to sue the "friend" to recover any damages they suffered (e.g. paying off the loan).
If your parents pay it off, there will be no judgment against the "friend" until and unless your parents sue him. The amount at issue will depend on whether it is worth it to do this.
In any event, I'm going to lock this as this is really a question your parents need to address with a lawyer.
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