We co-signed for a private student loan, now primary isn't paying
November 10, 2017 2:27 PM Subscribe
Several years ago we co-signed for a private student loan with Navient for our relative "Sarah". It seemed like the right thing to do at the time. The loan has recently come out of deferment. Sarah is not paying on the loan and quite possibly won't. Navient cannot reach her. They can reach us, though. I know we don't have lots of options, but what are our options here?
In recent years Sarah has borrowed from several other relatives and not paid them back and we're aware of some other didn't-pay issues with institutions. She has cut off contact with family, and vice versa, over the family debts and is OK with burnt bridges. However, she still talks to us, claims to want to manage her debt, and professes concern about her own credit rating. Until recently she told us this loan was returned to deferment and Navient just hadn't sorted that paperwork out yet. That was either a lie or a mistake, we don't know which, but we all agree it's not true now. We can't really trust Sarah or what she says, but we don't show our frustration and we are trying to keep the lines of communication open.
We can make payments on this loan if we must (balance is around $5000, payments are less than $100/month, we can afford this), but naturally we'd rather not. From what we can tell Sarah is also capable of paying on this loan (she makes decent money and lives better than we do, although possibly beyond her actual means). We are willing to get into a game of chicken here, and hope that dings to both of our credits will convince Sarah to start paying on the loan. I am not optimistic that this will actually work, but I think it's our best shot. I see any payment from us as conceding the entire issue; Sarah knows if we care enough about consequences to pay even once, then we care enough to pay the next time.
Enough about Sarah. The other part of this is Navient. I recognize that we co-signed the loan, and that we are fully legally required to pay the debt if Sarah doesn't. However, I am willing to work Navient's system/play Navient's game if there are any moves to make there. Here's what I think so far:
1) We can take some dings on our credit rating, I think. We hardly use credit. We have credit cards, but we don't need any new ones any time soon. We're not moving any time soon. However, we do have a kid that is getting close to college age. However, this kid might not even go to college, or might not for a few more years yet.
2) We probably don't want this loan to go "into default", because this is regarded as especially bad on your credit history. On the other hand if did go into default, or was about to, we might be able to negotiate a settlement with Navient at a reduced amount. If I knew how bad the consequences of a default were (immediately, and over the longer run) I might consider letting this happen.
3) There is apparently a big difference between a federal student loan and a private student loan. This is a private student loan. I think this may affect 1) and 2) above.
4) There is apparently an entire industry built up around navigating the details of student loan debt. 2 minutes on Google trying to understand this stuff gets you spammed with offers (mostly sketchy looking) promising to help you deal with your student loan debt. I suspect that most of these guys are doing stuff that wouldn't help us (consolidation loans or filing forbearance paperwork for example) and a single-loan $5000 balance is probably too simple/small for clever tricks anyway. But I could be wrong, maybe hiring an expert (that isn't just a scammer) would be useful here.
Our current plan, such as it is, is to not make any payments on the loan, to persistently plead with Sarah to start paying, and to wait until the loan is almost in default. At that point, assuming Sarah hasn't started paying, probably we'll give in and start making payments. Unless it seems like deliberate default actually would be better for us, which I doubt.
We're looking for suggestions about any of the above, but especially points 1-4.
In recent years Sarah has borrowed from several other relatives and not paid them back and we're aware of some other didn't-pay issues with institutions. She has cut off contact with family, and vice versa, over the family debts and is OK with burnt bridges. However, she still talks to us, claims to want to manage her debt, and professes concern about her own credit rating. Until recently she told us this loan was returned to deferment and Navient just hadn't sorted that paperwork out yet. That was either a lie or a mistake, we don't know which, but we all agree it's not true now. We can't really trust Sarah or what she says, but we don't show our frustration and we are trying to keep the lines of communication open.
We can make payments on this loan if we must (balance is around $5000, payments are less than $100/month, we can afford this), but naturally we'd rather not. From what we can tell Sarah is also capable of paying on this loan (she makes decent money and lives better than we do, although possibly beyond her actual means). We are willing to get into a game of chicken here, and hope that dings to both of our credits will convince Sarah to start paying on the loan. I am not optimistic that this will actually work, but I think it's our best shot. I see any payment from us as conceding the entire issue; Sarah knows if we care enough about consequences to pay even once, then we care enough to pay the next time.
Enough about Sarah. The other part of this is Navient. I recognize that we co-signed the loan, and that we are fully legally required to pay the debt if Sarah doesn't. However, I am willing to work Navient's system/play Navient's game if there are any moves to make there. Here's what I think so far:
1) We can take some dings on our credit rating, I think. We hardly use credit. We have credit cards, but we don't need any new ones any time soon. We're not moving any time soon. However, we do have a kid that is getting close to college age. However, this kid might not even go to college, or might not for a few more years yet.
2) We probably don't want this loan to go "into default", because this is regarded as especially bad on your credit history. On the other hand if did go into default, or was about to, we might be able to negotiate a settlement with Navient at a reduced amount. If I knew how bad the consequences of a default were (immediately, and over the longer run) I might consider letting this happen.
3) There is apparently a big difference between a federal student loan and a private student loan. This is a private student loan. I think this may affect 1) and 2) above.
4) There is apparently an entire industry built up around navigating the details of student loan debt. 2 minutes on Google trying to understand this stuff gets you spammed with offers (mostly sketchy looking) promising to help you deal with your student loan debt. I suspect that most of these guys are doing stuff that wouldn't help us (consolidation loans or filing forbearance paperwork for example) and a single-loan $5000 balance is probably too simple/small for clever tricks anyway. But I could be wrong, maybe hiring an expert (that isn't just a scammer) would be useful here.
Our current plan, such as it is, is to not make any payments on the loan, to persistently plead with Sarah to start paying, and to wait until the loan is almost in default. At that point, assuming Sarah hasn't started paying, probably we'll give in and start making payments. Unless it seems like deliberate default actually would be better for us, which I doubt.
We're looking for suggestions about any of the above, but especially points 1-4.
If your private loans go into default, eventually your salary (or tax returns, or other money going through the govt like pensions) will be garnished. You won't get a chance to do a "deal" of paying it off for pennies, like other debts (Source: old roommate skated off from his loans and worked under the table. 5 years later, he got a regular job that required filling out tax forms...and his garnishments started I think 2 months later).
posted by holyrood at 2:42 PM on November 10, 2017 [3 favorites]
posted by holyrood at 2:42 PM on November 10, 2017 [3 favorites]
Sarah does not care about anyone who isn't going to give her money and only mildly harass her to pay it back. You've seen as soon as others get serious about wanting payback she cuts them off. She's only still in contact with you because you've only mildly pleaded with her to do *what she has no intention of doing* and possibly because she thinks she may be able to get more money out of you. You're going to end up paying this loan. How easy you make it on Sarah is up to you.
You say Navient can't reach Sarah. You also say you and Sarah are in contact. Why aren't you sharing all of Sarah's contact information with Navient?
posted by CoffeeHikeNapWine at 2:52 PM on November 10, 2017 [69 favorites]
You say Navient can't reach Sarah. You also say you and Sarah are in contact. Why aren't you sharing all of Sarah's contact information with Navient?
posted by CoffeeHikeNapWine at 2:52 PM on November 10, 2017 [69 favorites]
You say Navient can't reach Sarah. You also say you and Sarah are in contact. Why aren't you sharing all of Sarah's contact information with Navient?
my guess: sarah's just not picking up the phone when it's Navient
Navient is a known horror show, and that you're stuck dealing with them specifically sucks. Private student loans leave you with few options, and I think you are correct in realising that consolidation makes no sense for you in a single-loan, low-dollar-total situation. It sucks, but I think you've ended up in a worst-case-scenario co-signer situation, and should probably consider that $5K gone. Pay it off as quickly as you can to avoid interest mounting, and hope that someday Sarah grows a conscience and reimburses you in part or full.
posted by halation at 2:58 PM on November 10, 2017 [9 favorites]
my guess: sarah's just not picking up the phone when it's Navient
Navient is a known horror show, and that you're stuck dealing with them specifically sucks. Private student loans leave you with few options, and I think you are correct in realising that consolidation makes no sense for you in a single-loan, low-dollar-total situation. It sucks, but I think you've ended up in a worst-case-scenario co-signer situation, and should probably consider that $5K gone. Pay it off as quickly as you can to avoid interest mounting, and hope that someday Sarah grows a conscience and reimburses you in part or full.
posted by halation at 2:58 PM on November 10, 2017 [9 favorites]
You know, I sometimes daydream about walking away from my grad school loans. But my parents co-signed those loans for me, and leaving them holding the bag is just about one of the most dishonorable things I can imagine.
You need to start playing hardball with Sarah.
posted by orrnyereg at 2:59 PM on November 10, 2017 [10 favorites]
You need to start playing hardball with Sarah.
posted by orrnyereg at 2:59 PM on November 10, 2017 [10 favorites]
Playing chicken with someone that doesn't give a fuck is generally not a winning strategy. Letting your credit get damaged can lead to annoyances with everything from cell phone contracts to higher insurance rates to problems with future employers when they run a credit check on you. If you and your spouse make decent money, they know that and will likely squeeze you for it.
we're aware of some other didn't-pay issues with institutions ... [we] hope that dings to both of our credits will convince Sarah to start paying on the loan
I betcha her credit is already ruined, no matter how much she tells you she's worried about it. She's at the glorious stage where she doesn't have to care because it can't get much worse. You don't have leverage here.
posted by Candleman at 3:04 PM on November 10, 2017 [37 favorites]
we're aware of some other didn't-pay issues with institutions ... [we] hope that dings to both of our credits will convince Sarah to start paying on the loan
I betcha her credit is already ruined, no matter how much she tells you she's worried about it. She's at the glorious stage where she doesn't have to care because it can't get much worse. You don't have leverage here.
posted by Candleman at 3:04 PM on November 10, 2017 [37 favorites]
Navient doesn't have to deal; they can and will garnish paychecks, tax returns, everything they can get their hands on (I'm pretty sure, when pushed, they can empty your bank accounts too) because the system is set up that someone who gets a great deal on a student loan gets really screwed if they don't pay it back. I know this from first-hand experience after a rough stretch when I was underemployed. Eat the $5000 (which is tiny, tiny, tiny when it comes to student loans) and call it a gift to Sarah, and if she ever pays you back then rejoice that the impossible has happened.
posted by AzraelBrown at 3:05 PM on November 10, 2017 [24 favorites]
posted by AzraelBrown at 3:05 PM on November 10, 2017 [24 favorites]
Playing chicken until the loan is almost in default sounds like a terrible idea. For one thing, you'll end up owing EVEN MORE than you do now because of fees and interest and more interest on those fees etc.
You could consult with a lawyer about the loan and see if there's some sort of wiggle room but I doubt it.
I would pay the loan down as quickly as possible and chalk it up to one expensive lesson learned. Whether you decide to continue contact with Sarah is up to you, but I would write that money off. And don't loan her any more money in the future.
You may not "need" a good credit rating now, but you never know what the future might have in store for you. What if your car up and dies and you need a loan to get a new one, for example.
posted by purple_bird at 3:07 PM on November 10, 2017 [13 favorites]
You could consult with a lawyer about the loan and see if there's some sort of wiggle room but I doubt it.
I would pay the loan down as quickly as possible and chalk it up to one expensive lesson learned. Whether you decide to continue contact with Sarah is up to you, but I would write that money off. And don't loan her any more money in the future.
You may not "need" a good credit rating now, but you never know what the future might have in store for you. What if your car up and dies and you need a loan to get a new one, for example.
posted by purple_bird at 3:07 PM on November 10, 2017 [13 favorites]
Definitely don’t go into default. It’s not a negotiation tactic, it’s a nightmare.
Can you or your kid pay cash for his possible schooling? If not, a default could tank your or even his chances of getting decent aid.
posted by kapers at 3:11 PM on November 10, 2017 [1 favorite]
Can you or your kid pay cash for his possible schooling? If not, a default could tank your or even his chances of getting decent aid.
posted by kapers at 3:11 PM on November 10, 2017 [1 favorite]
Pay $5000 for the lesson of not co-signing for anyone's anything ever again.
Not just being snarky: you have everything to lose, and nothing to gain except a flaky person liking you.
posted by so fucking future at 3:11 PM on November 10, 2017 [32 favorites]
Not just being snarky: you have everything to lose, and nothing to gain except a flaky person liking you.
posted by so fucking future at 3:11 PM on November 10, 2017 [32 favorites]
You have far more to lose than Sarah. I would pay the loan and investigate the possibility of suing her in order to recoup some of the money.
posted by parakeetdog at 3:12 PM on November 10, 2017 [18 favorites]
posted by parakeetdog at 3:12 PM on November 10, 2017 [18 favorites]
[I]f [the loan] did go into default, or was about to, we might be able to negotiate a settlement with Navient at a reduced amount.
This will almost never happen with an educational loan.
At this point, you can absolutely express your frustration with Sarah. You probably should. I defaulted on educational loans in my mid-20s because I was overworked, underpaid, and overwhelmed. I doubt Sarah has a grand plan for any of this--she's not intending to rip people off, she's not intending to be irresponsible--but that's a problem you can help her solve by showing your outright frustration, regret, even anger at her actions.
I ended up cleaning up my defaulted loan mess with the help of a very, very patient significant other. If Sarah doesn't have an s.o. or another person in her life who can sit her down and explain or instruct on the next steps here, that could be a good role for you--even if that means you helping her talk to credit counselors and the like.
posted by late afternoon dreaming hotel at 3:13 PM on November 10, 2017 [4 favorites]
This will almost never happen with an educational loan.
At this point, you can absolutely express your frustration with Sarah. You probably should. I defaulted on educational loans in my mid-20s because I was overworked, underpaid, and overwhelmed. I doubt Sarah has a grand plan for any of this--she's not intending to rip people off, she's not intending to be irresponsible--but that's a problem you can help her solve by showing your outright frustration, regret, even anger at her actions.
I ended up cleaning up my defaulted loan mess with the help of a very, very patient significant other. If Sarah doesn't have an s.o. or another person in her life who can sit her down and explain or instruct on the next steps here, that could be a good role for you--even if that means you helping her talk to credit counselors and the like.
posted by late afternoon dreaming hotel at 3:13 PM on November 10, 2017 [4 favorites]
Pay it and move on. Despite sincere good intentions, you made a mistake, a lesson has been learned, and dear god I hope you will not make this mistake again. All that matters now is protecting your own credit and not ending up paying out even more than what is currently owed.
You will never get a single penny from Sarah, nor will she ever express sincere remorse or make any even pathetically meager attempt at amends. You owe this person nothing: no communication, no goodwill, and certainly no further financial assistance, neither now nor in the future. You don't even have to accept an apology, should one ever be forthcoming, which it will not.
source: me, a person who has lived a life full of sarahs, and who no longer has a single fuck to give.
posted by poffin boffin at 3:15 PM on November 10, 2017 [26 favorites]
You will never get a single penny from Sarah, nor will she ever express sincere remorse or make any even pathetically meager attempt at amends. You owe this person nothing: no communication, no goodwill, and certainly no further financial assistance, neither now nor in the future. You don't even have to accept an apology, should one ever be forthcoming, which it will not.
source: me, a person who has lived a life full of sarahs, and who no longer has a single fuck to give.
posted by poffin boffin at 3:15 PM on November 10, 2017 [26 favorites]
We are willing to get into a game of chicken here, and hope that dings to both of our credits will convince Sarah to start paying on the loan. I
As others have mentioned, I doubt she cares. Additionally, I bet her credit is already fucked. You definitely don’t have hand with this angle.
posted by Room 641-A at 3:18 PM on November 10, 2017 [2 favorites]
As others have mentioned, I doubt she cares. Additionally, I bet her credit is already fucked. You definitely don’t have hand with this angle.
posted by Room 641-A at 3:18 PM on November 10, 2017 [2 favorites]
We are willing to get into a game of chicken here, and hope that dings to both of our credits will convince Sarah to start paying on the loan.
you can't shame someone who is currently enthusiastically fleecing multiple members of your family.
bad credit follows you for 7 years. paying up isn't conceding or letting her win, it's protecting yourself and your family. she's already won.
posted by poffin boffin at 3:27 PM on November 10, 2017 [21 favorites]
you can't shame someone who is currently enthusiastically fleecing multiple members of your family.
bad credit follows you for 7 years. paying up isn't conceding or letting her win, it's protecting yourself and your family. she's already won.
posted by poffin boffin at 3:27 PM on November 10, 2017 [21 favorites]
I have a Sarah in my life. I paid off the debt. The unforeseen benefit to me is that I immediately became immune to subsequent pleas for financial help. Saying "you know, you still owe me that $5,000" (even though I know I'll never see a penny of it) gets her to change the subject every time.
posted by Former Congressional Representative Lenny Lemming at 3:44 PM on November 10, 2017 [35 favorites]
posted by Former Congressional Representative Lenny Lemming at 3:44 PM on November 10, 2017 [35 favorites]
For anyone coming here for future reference, apparently if you had made Sarah sign a contract requiring her to pay then you could sue her for breach of contract. Unfortunately it may be hard to successfully sue her without an agreement outside the loan itself.
posted by GuyZero at 3:46 PM on November 10, 2017 [2 favorites]
posted by GuyZero at 3:46 PM on November 10, 2017 [2 favorites]
Your thinking about "default" overlooks that before that point, you'll have a bunch of 30-day, 60-day, and 90-day late marks that will take like 5-7 years to age off.
stuff that wouldn't help us (consolidation loans
Hmm but wait. Now that Sarah is making good money, would she refinance this, taking your name off of it?
posted by salvia at 3:48 PM on November 10, 2017 [6 favorites]
stuff that wouldn't help us (consolidation loans
Hmm but wait. Now that Sarah is making good money, would she refinance this, taking your name off of it?
posted by salvia at 3:48 PM on November 10, 2017 [6 favorites]
If you have good credit, and you can get a better loan than Navient's, then go to your bank and do so. $5000 is used-car money, and you've got credit that Sarah won't ever have at this rate, so it seems likely you can get a good rate. Navient created the loan for Sarah's credit and earnings situation, not yours, so it's your duty to change the terms of what you owe to fit your own situation.
Use a new loan with lower interest to pay off Navient, and then sue Sarah for $5000. Depending on your location and the local laws, you may want to sue her for a lower amount if $5000 exceeds the small-claims limit. You won't get the money from her directly this way, either, but you'll draw a line in the sand, something that her other relatives haven't done yet.
Additionally, with a court awarding you the money, you'll have the power to garnish her wages to collect if you are so inclined, which either gets money back in your pocket, or gives you leverage as a threat of garnishment and get you paid. But you should essentially consider yourself as being out the $5K forever.
If you have the $5K sitting in savings, gathering dust, then pay Navient right now. You aren't making dick in interest there, compared the the interest you'd be paying either on a new loan or Navient's loan. Then re-save the money over the next 50 months, or whatever.
posted by Sunburnt at 3:49 PM on November 10, 2017 [35 favorites]
Use a new loan with lower interest to pay off Navient, and then sue Sarah for $5000. Depending on your location and the local laws, you may want to sue her for a lower amount if $5000 exceeds the small-claims limit. You won't get the money from her directly this way, either, but you'll draw a line in the sand, something that her other relatives haven't done yet.
Additionally, with a court awarding you the money, you'll have the power to garnish her wages to collect if you are so inclined, which either gets money back in your pocket, or gives you leverage as a threat of garnishment and get you paid. But you should essentially consider yourself as being out the $5K forever.
If you have the $5K sitting in savings, gathering dust, then pay Navient right now. You aren't making dick in interest there, compared the the interest you'd be paying either on a new loan or Navient's loan. Then re-save the money over the next 50 months, or whatever.
posted by Sunburnt at 3:49 PM on November 10, 2017 [35 favorites]
Pay the payments to keep current on the loan. Whenever you see Sarah, say "Hey, Sarah, you cost me another $100 this month, pay me!!" Demand that she give you her phone so you can pawn it and get the cash. Be parked in her driveway when she comes home. Annoy her. Show up at her place of employment. Publicize her shitiness to her relatives, and especially her friends. Do it on facebook, twitter, wherever.
If you want to play chicken, that's how to play.
posted by at at 4:02 PM on November 10, 2017 [23 favorites]
If you want to play chicken, that's how to play.
posted by at at 4:02 PM on November 10, 2017 [23 favorites]
Ultimately, I think you will have to pay and I would do so soonest. But, first, I would explore two things. One, if you want the $5,000 to remain liquid, check out a loan yourself as noted above to pay off the student loan. You will be converting your obligation to a much much lower interest rate. I think as you correctly deduced, paying the monthly $100, even once, is the worst case bc it will show Sarah you will back down and it keeps the interest accruing. The other thing I would try, is to call Navient, explain that you are the co-signer. I would give them Sarah's address and contact information. I would also ask them about negotiating a payoff amount if you could somehow pay it off in a lump sum. Cash, even at a discount to 100% is better than suing and pursuing you both. Offer them $3900 right now. They will say no, but then ask them if there is any amount less than $5000 that you could pay to satisfy the loan if you were able to arrange payment in 10 days. Say that before you go try to find the cash to pay it off, you need to know they will accept say $4500 in full satisfaction of the debt.
Worst case is that you waste 30 minutes on the phone and you still end up paying the $5k. You are going to pay some amount near $5000. Right now you are looking for ways to reduce it even by a few hundred bucks.
posted by AugustWest at 4:04 PM on November 10, 2017 [7 favorites]
Worst case is that you waste 30 minutes on the phone and you still end up paying the $5k. You are going to pay some amount near $5000. Right now you are looking for ways to reduce it even by a few hundred bucks.
posted by AugustWest at 4:04 PM on November 10, 2017 [7 favorites]
If you have good credit, and you can get a better loan than Navient's, then go to your bank and do so.
FWIW, my understanding is that, because student loans are impossible to get rid of through bankruptcy, they tend to have better rates than truly unsecured personal loans. Still worth a try, but I don't believe it's likely to work.
posted by nebulawindphone at 4:07 PM on November 10, 2017 [2 favorites]
FWIW, my understanding is that, because student loans are impossible to get rid of through bankruptcy, they tend to have better rates than truly unsecured personal loans. Still worth a try, but I don't believe it's likely to work.
posted by nebulawindphone at 4:07 PM on November 10, 2017 [2 favorites]
I see any payment from us as conceding the entire issue; Sarah knows if we care enough about consequences to pay even once, then we care enough to pay the next time.
OK everyone above is basically at BURN THE WITCH! but there is another way to approach this that gives her the benefit of the doubt and leaves the lines of communication open. I mean, it is possible that she's overwhelmed by the debt she has, was never given any help learning to budget, and is so ashamed she can't face her family.
So you could offer to repay the $5K after she meets the condition of sitting down with you to review her debts and establish a feasible budget and repayment plan. You can then pay the $5K all at once or pick up the payments if she signs a repayment agreement with you (basically what GuyZero said.)
While I absolutely positively would not tell her this, that gives her a chance to get her shit together and gives you the option to sue her in small claims court if/when she fails. This puts you in the only winning position you can get to from here.
posted by DarlingBri at 4:11 PM on November 10, 2017 [33 favorites]
OK everyone above is basically at BURN THE WITCH! but there is another way to approach this that gives her the benefit of the doubt and leaves the lines of communication open. I mean, it is possible that she's overwhelmed by the debt she has, was never given any help learning to budget, and is so ashamed she can't face her family.
So you could offer to repay the $5K after she meets the condition of sitting down with you to review her debts and establish a feasible budget and repayment plan. You can then pay the $5K all at once or pick up the payments if she signs a repayment agreement with you (basically what GuyZero said.)
While I absolutely positively would not tell her this, that gives her a chance to get her shit together and gives you the option to sue her in small claims court if/when she fails. This puts you in the only winning position you can get to from here.
posted by DarlingBri at 4:11 PM on November 10, 2017 [33 favorites]
Im so sorry this happened to you, it sucks and its massively unfair, but your job now is to save yourselves. Start paying the loan. $5,000.00, though its a considerable chunk of cash, is nothing compared to the heartaches and headaches debt collectors will visit on you. The stress will tear down your health. You think you want to fight, but in the long run Im certain your lives will be better if you just pay. I know its hard to stomach and believe me I feel for you, but the truth is, you co signed, its your loan and your responsibility as much as it is Sarahs. Just pay it.
Source: I am someone who struggled to pay my student loans for 28 years. Finally paid them all off at age 49.
posted by WalkerWestridge at 4:22 PM on November 10, 2017 [2 favorites]
Source: I am someone who struggled to pay my student loans for 28 years. Finally paid them all off at age 49.
posted by WalkerWestridge at 4:22 PM on November 10, 2017 [2 favorites]
Another option would be to bribe her to refinance to get your name off. "If you can refinance $4500, we will pay the last $500 as a thank you."
posted by salvia at 4:42 PM on November 10, 2017 [2 favorites]
posted by salvia at 4:42 PM on November 10, 2017 [2 favorites]
If it goes unpaid, $5000 quickly spirals to $10k+ with their rediculous fees. I'd suck it up and keep it current while hounding her.
Don't cosign anything else ever without expecting to pay for it.
posted by TheAdamist at 4:59 PM on November 10, 2017
Don't cosign anything else ever without expecting to pay for it.
posted by TheAdamist at 4:59 PM on November 10, 2017
It sounds like Sarah has failed to pay back debts to both other relatives and to other institutions. Regardless of whether she is doing this maliciously, never learned to budget, or whatever, I can't imagine why you would think your debt would be different (other than wishing it would be so). Someone in this situation almost certainly already has bad credit, and obviously doesn't care about burning down personal relationships over money. I would pay down the debt as aggressively as possible, and sue in small claims court if at all possible.
posted by rainbowbrite at 5:06 PM on November 10, 2017 [6 favorites]
posted by rainbowbrite at 5:06 PM on November 10, 2017 [6 favorites]
I think only one person above mentioned taking Sarah to court (but it was small-claims). I think you'll need Big Boy court, but since you say Sarah is making money, you can probably line up with the other creditors who are garnishing her salary. Probably worth a visit to a lawyer to figure out what you can do in your state. They'll also probably be able to set you up with a PI to find any assets she has, where her paycheck goes, and so on. Plus, you may be able to tack all that onto your bill to her.
It's possible that her debts are small enough individually that nobody has bothered to sue her yet, so if you're the first, you'll get first dibs on whatever you can squeeze out of her.
(IAAL, IANYL, TINLA.)
posted by spacewrench at 5:24 PM on November 10, 2017 [2 favorites]
It's possible that her debts are small enough individually that nobody has bothered to sue her yet, so if you're the first, you'll get first dibs on whatever you can squeeze out of her.
(IAAL, IANYL, TINLA.)
posted by spacewrench at 5:24 PM on November 10, 2017 [2 favorites]
I would try to take the high road here. Pay off the loan either on original terms or with a new loan if the terms are better - and remain in friendly contact with Sarah. When you co-signed for her loan you were trying to do a good thing - in fact you DID do a good thing. Don’t let the poor outcome of the loan cost you something more valuable.
posted by machinecraig at 5:36 PM on November 10, 2017 [2 favorites]
posted by machinecraig at 5:36 PM on November 10, 2017 [2 favorites]
If Sarah is making good money, perhaps you can introduce Navient to her employer. If the payment came out of her paycheck, that would be best all around. (However--not sure if that can happen until the loan is in default--and as mentioned above, you don't want to go that way.)
posted by flug at 5:45 PM on November 10, 2017 [3 favorites]
posted by flug at 5:45 PM on November 10, 2017 [3 favorites]
Fyi it's a private student loan. Which is in effect not a student loan. Their only recourse is standard debt collection. Not garnishment etc. And you can bankrupt it etc (not suggesting you do, but just for clarity). This is not a stafford etc it's a simple bank loan. As for what to actually do, im 100% behind sunburnt. Refinance away from navient, pay off. Sue sarah. Cut sarah off for life. Never cosign anyrjing again. Sorry you're fighting with this!
posted by chasles at 6:04 PM on November 10, 2017 [2 favorites]
posted by chasles at 6:04 PM on November 10, 2017 [2 favorites]
all this talk of garnishing wages, i'm no expert but I believe that it's only the IRS that can do that (US) all the others get "judgments" that they then need to enforce on their own by filing liens etc.
posted by patnok at 6:27 PM on November 10, 2017
posted by patnok at 6:27 PM on November 10, 2017
Fyi it's a private student loan. Which is in effect not a student loan. Their only recourse is standard debt collection. Not garnishment etc. And you can bankrupt it etc (not suggesting you do, but just for clarity).
Absolutely, 1000% wrong.
There is some variation in state laws, but basically you can garnish wages, create liens, and seize certain assets in satisfaction of any judgment. That most definitely includes one on private student loans. What a private student-loan lender can't do that the federal government can is administrative garnishment (i.e., without a full-scale court proceeding) or interception of tax returns.
Private loans became non-dischargeable in bankruptcy in the mid-2000s, in one of the great giveaways of all time.
OP, you are most definitely stuck. Do not let this loan go to default. In addition to all the other miseries people have mentioned, they can tack on ~18% "collection costs" even if you pay them in full the very next day. And do not go near anyone promising you they can get any kind of forgiveness or reduction. 100% scam industry.
posted by praemunire at 6:36 PM on November 10, 2017 [7 favorites]
Absolutely, 1000% wrong.
There is some variation in state laws, but basically you can garnish wages, create liens, and seize certain assets in satisfaction of any judgment. That most definitely includes one on private student loans. What a private student-loan lender can't do that the federal government can is administrative garnishment (i.e., without a full-scale court proceeding) or interception of tax returns.
Private loans became non-dischargeable in bankruptcy in the mid-2000s, in one of the great giveaways of all time.
OP, you are most definitely stuck. Do not let this loan go to default. In addition to all the other miseries people have mentioned, they can tack on ~18% "collection costs" even if you pay them in full the very next day. And do not go near anyone promising you they can get any kind of forgiveness or reduction. 100% scam industry.
posted by praemunire at 6:36 PM on November 10, 2017 [7 favorites]
Most of the posters here are correct. You're on the hook, and the student loan mafia is not something you want to be indebted to. If I were in your position I would pay the loan completely off and try to get a signature on a promissory note/IOU from deadbeat Sarah. She'll never pay, but if you ever feel like trying you could sue her. Don't take the hits on your credit, just don't. They have all the power in this situation. I'm sorry you agreed to help her and she's an asshole. You're obviously very nice people.
posted by clone boulevard at 7:30 PM on November 10, 2017 [1 favorite]
posted by clone boulevard at 7:30 PM on November 10, 2017 [1 favorite]
At this point, there's no relationship with Sarah to preserve, so lawyer up and sue the crap out of her. Remaining in friendly contact with her only exists as long as she thinks she can get more money out of you (you've seen what happens with other family members when she realises she can't.)
She has a job and income, so this situation isn't happening because she's fallen on hard times, it's happening because she's a leech. At the very least, suing her might make her think twice before doing this to someone else. Everyone here is telling you to learn a lesson, what to never be kind, never help out a family member ever again? What a horrible lesson to learn. No. The lesson to learn here is entirely Sarah's - don't rip off people who love you and have done nothing but try to help you. Lawyer. Now.
posted by Jubey at 7:36 PM on November 10, 2017 [2 favorites]
She has a job and income, so this situation isn't happening because she's fallen on hard times, it's happening because she's a leech. At the very least, suing her might make her think twice before doing this to someone else. Everyone here is telling you to learn a lesson, what to never be kind, never help out a family member ever again? What a horrible lesson to learn. No. The lesson to learn here is entirely Sarah's - don't rip off people who love you and have done nothing but try to help you. Lawyer. Now.
posted by Jubey at 7:36 PM on November 10, 2017 [2 favorites]
I was in exactly this situation. I tried as hard as I could but I had to pay it.
posted by k8t at 8:29 PM on November 10, 2017 [2 favorites]
posted by k8t at 8:29 PM on November 10, 2017 [2 favorites]
I would add that I do think there would be a tax benefit to you. If you can get Sarah to sign a note and if she then cannot pay you can forgive the loan giving her income and you a loss. Check with an accountant.
posted by AugustWest at 8:44 PM on November 10, 2017 [2 favorites]
posted by AugustWest at 8:44 PM on November 10, 2017 [2 favorites]
Pay back the loan and forgive Sarah (and tell her you don’t consider her indebted to you).
Sometimes, human relations are worth more than money.
posted by Kwadeng at 9:16 PM on November 10, 2017 [4 favorites]
Sometimes, human relations are worth more than money.
posted by Kwadeng at 9:16 PM on November 10, 2017 [4 favorites]
"For anyone coming here for future reference, apparently if you had made Sarah sign a contract requiring her to pay then you could sue her for breach of contract. Unfortunately it may be hard to successfully sue her without an agreement outside the loan itself."
Talk to a lawyer in your jurisdiction and find out if you can make a contract NOW with Sarah for you to pay the whole amount now, and then for her to pay you $50/month or whatever at a slightly under market interest rate. (The consideration to Sarah is not having Navient after her forever, and a lower monthly payment & interest rate.) Sarah will probably sign it, thinking, "Wow, my problem here is solved, Navient won't bother me and my relative I can just keep putting off!"
Wait about three months for her to go into default on your new loan agreement, then sue her and garnish her wages.
posted by Eyebrows McGee at 9:22 PM on November 10, 2017 [21 favorites]
Talk to a lawyer in your jurisdiction and find out if you can make a contract NOW with Sarah for you to pay the whole amount now, and then for her to pay you $50/month or whatever at a slightly under market interest rate. (The consideration to Sarah is not having Navient after her forever, and a lower monthly payment & interest rate.) Sarah will probably sign it, thinking, "Wow, my problem here is solved, Navient won't bother me and my relative I can just keep putting off!"
Wait about three months for her to go into default on your new loan agreement, then sue her and garnish her wages.
posted by Eyebrows McGee at 9:22 PM on November 10, 2017 [21 favorites]
All you can do now is minimize your losses.
Find the young lady (tip: she is where her phone is) and ask her to sign a promissary note for 5K payable by EO 2018. Have your accountant write this and get it notarized.
Refinance the loan as quickly as possible. Even a LOC at your bank or credit union is likely to have a lower interest rate.
Assuming the young lady fails to pay you in full or at all, try to write-off your 5K on your taxes. Do not do this without a written notarized contract.
Done.
posted by Kalatraz at 9:52 PM on November 10, 2017 [2 favorites]
Find the young lady (tip: she is where her phone is) and ask her to sign a promissary note for 5K payable by EO 2018. Have your accountant write this and get it notarized.
Refinance the loan as quickly as possible. Even a LOC at your bank or credit union is likely to have a lower interest rate.
Assuming the young lady fails to pay you in full or at all, try to write-off your 5K on your taxes. Do not do this without a written notarized contract.
Done.
posted by Kalatraz at 9:52 PM on November 10, 2017 [2 favorites]
At this point, there's no relationship with Sarah to preserve, so lawyer up and sue the crap out of her.
As has been pointed out several times, this is not an option on a loan one co-signs. It is only an option if there is a separate, post-loan legal agreement in place ala EyebrowsMcGee's suggestion.
posted by DarlingBri at 12:24 AM on November 11, 2017 [2 favorites]
As has been pointed out several times, this is not an option on a loan one co-signs. It is only an option if there is a separate, post-loan legal agreement in place ala EyebrowsMcGee's suggestion.
posted by DarlingBri at 12:24 AM on November 11, 2017 [2 favorites]
> my understanding is that, because student loans are impossible to get rid of through bankruptcy, they tend to have better rates than truly unsecured personal loans
Possibly. A quick google indicates that Navient loans are in the 3.8-5% range. However, OP may get a secured loan as well, and they should do so before Navient sinks their credit any further.
posted by Sunburnt at 2:05 AM on November 11, 2017
Possibly. A quick google indicates that Navient loans are in the 3.8-5% range. However, OP may get a secured loan as well, and they should do so before Navient sinks their credit any further.
posted by Sunburnt at 2:05 AM on November 11, 2017
Honestly, you're sounding like I did when I was in college at 20 getting credit cards for the first time. Literally the reason loans have co-signers is for situations like this. I'm a little baffled that you would co-sign a loan, not pay it, and think that would be a good idea. or that you could game the system.
Have you ever looked at your credit report? Nothing is more depressing than seeing row after row of red marks on your credit report. Every single time you don't pay, it's another mark. Not just one mark for the loan, but one mark per payment.
I had terrible credit for a very long time and it affects you in ways you don't realize. The reason you have credit is for when you need it, which you can't always plan for.
posted by lyssabee at 6:51 AM on November 11, 2017 [4 favorites]
Have you ever looked at your credit report? Nothing is more depressing than seeing row after row of red marks on your credit report. Every single time you don't pay, it's another mark. Not just one mark for the loan, but one mark per payment.
I had terrible credit for a very long time and it affects you in ways you don't realize. The reason you have credit is for when you need it, which you can't always plan for.
posted by lyssabee at 6:51 AM on November 11, 2017 [4 favorites]
It is only an option if there is a separate, post-loan legal agreement in place ala EyebrowsMcGee's suggestion.
This is not accurate, at least in some jurisdictions. OP should discuss with a lawyer in their jurisdiction.
posted by spacewrench at 11:56 AM on November 11, 2017
This is not accurate, at least in some jurisdictions. OP should discuss with a lawyer in their jurisdiction.
posted by spacewrench at 11:56 AM on November 11, 2017
Pedant: They're called tax refunds, not tax returns.
posted by themanwho at 12:42 PM on November 11, 2017 [1 favorite]
posted by themanwho at 12:42 PM on November 11, 2017 [1 favorite]
absolutely 1000% wrong
No, it's not.
1. Wrt to wage garnishments i was unclear. The irs and the federal government can much more easily garnish wages. Private debt servicers have to win a judgement against you and go through a variety of legal proceedings. People were earlier referring to garnishment as a thing that could happen equivalent to a federal student loan. That's incorrect.
2. Yes you can still discharge private student loans through a variety of different methods some easier some not as much. But you absolutely can.
Regardless i still agree that owning the debt through some kind of personal loan and suing sarah is the best course of action.
posted by chasles at 8:00 AM on November 12, 2017
No, it's not.
1. Wrt to wage garnishments i was unclear. The irs and the federal government can much more easily garnish wages. Private debt servicers have to win a judgement against you and go through a variety of legal proceedings. People were earlier referring to garnishment as a thing that could happen equivalent to a federal student loan. That's incorrect.
2. Yes you can still discharge private student loans through a variety of different methods some easier some not as much. But you absolutely can.
Regardless i still agree that owning the debt through some kind of personal loan and suing sarah is the best course of action.
posted by chasles at 8:00 AM on November 12, 2017
People were earlier referring to garnishment as a thing that could happen equivalent to a federal student loan. That's incorrect.
Garnishment is the taking of money out of your paycheck every pay period without your consent. That absolutely would happen here. The distinction in this area is merely the process required to get the order: the federal government need only provide notice and an administrative hearing, whereas a private company has to obtain a judgment in court first. And it's not a meaningful distinction in this specific case: under the circumstances as described (assuming Sarah proceeds to default on the loan), they would get the order, and OP would be suffering the same harm as OP would if Sarah had defaulted on a federal loan. Suggesting to someone that private loans are not subject to garnishment is just irresponsible.
Yes you can still discharge private student loans through a variety of different methods some easier some not as much.
Private student loans are indeed student loans and are generally not dischargeable in bankruptcy. You can't just "bankrupt" them. There are some very narrow exceptions, but they are indeed narrow, ordinarily involving someone who is badly disabled. For borrowers who actually attended non-fraudulent schools that didn't close while they were attending, that's...really it. I suppose there might be exceptions, but for the most part even death doesn't discharge a private student loan. I don't know what era your experience is from, but the idea that there is even one moderately easy way to discharge a private student loan is moonshine.
posted by praemunire at 9:02 AM on November 12, 2017 [2 favorites]
Garnishment is the taking of money out of your paycheck every pay period without your consent. That absolutely would happen here. The distinction in this area is merely the process required to get the order: the federal government need only provide notice and an administrative hearing, whereas a private company has to obtain a judgment in court first. And it's not a meaningful distinction in this specific case: under the circumstances as described (assuming Sarah proceeds to default on the loan), they would get the order, and OP would be suffering the same harm as OP would if Sarah had defaulted on a federal loan. Suggesting to someone that private loans are not subject to garnishment is just irresponsible.
Yes you can still discharge private student loans through a variety of different methods some easier some not as much.
Private student loans are indeed student loans and are generally not dischargeable in bankruptcy. You can't just "bankrupt" them. There are some very narrow exceptions, but they are indeed narrow, ordinarily involving someone who is badly disabled. For borrowers who actually attended non-fraudulent schools that didn't close while they were attending, that's...really it. I suppose there might be exceptions, but for the most part even death doesn't discharge a private student loan. I don't know what era your experience is from, but the idea that there is even one moderately easy way to discharge a private student loan is moonshine.
posted by praemunire at 9:02 AM on November 12, 2017 [2 favorites]
This thread is closed to new comments.
posted by tooloudinhere at 2:35 PM on November 10, 2017 [19 favorites]