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Think Long and Hard About Co-Signing for a Step Child's Student Loan

By
Real Estate Agent with Remerica Integrity, Realtors®, Northville, MI

Think Long and Hard About Co-Signing for a Step Child's Student Loan

A few of you know the situation I've been going through lately, and as time passes, I'm sure I'll write something start-to-finish about it.

But right now, I just want to send out a warning.

I was talked into co-signing for my then step son's student loan for his freshman year of college.

We all talked about it, his mother included. The agreement was he would take on summer jobs and have the loan payed off BEFORE he was finished with college. The interest rate would be a LOT lower with my signature on it, and they both Guaranteed me that it would be taken care of by the time he graduated.

I think he's been out of school for 3 or 4 years now.

The debt is actually still higher than the initial loan, because he refused to work summers, instead playing video games all night and sleeping all day.

As for my (now ex) wife, she made excuse after excuse for him. I won't get into that here.

So, my divorce was finalized in April and I was in Bankruptcy court this morning to try to actually end up with some kind of future for myself.

Talking to my lawyer after meeting with the trustee, I realized that everything is possibly really gonna work out (eventually).

But, there's still the issue of the Student Loan.

Bankruptcy doesn't remove the Student Loan debt. This one is for LIFE!

As long as he pays it, there isn't an issue, other than debt-to-income potential issues.

But, let's say that I rebuild my credit over the next few years. I'm starting to think about getting a loan for a new place to live and he misses a payment. Or three. And I don't find out about it until my loan is declined. I would then need to start over with my credit rebuild!

Just think about it. That's all I'm saying.

 

Comments (16)

Sherry Scales
Austin Texas Homes, LLC - Leander, TX
Realtor, for Austin, TX and surrounding areas

Eric, I know this is such a hard time for you....and I too learned alot of things going through a divorce myself, and learned more through the death of my father, about many things we never thought would happen, and questions we didn't ask while signing up for something.  It is a learning experience...and all we can do is get through it and share it with others...to hopefully keep them from having to go through the lessons we have already learned. Stay strong!

Aug 21, 2013 10:15 AM
Cindy Jones
Integrity Real Estate Group - Woodbridge, VA
Pentagon, Fort Belvoir & Quantico Real Estate News

This should be a word of warning for co-signing on any loan.  You have created and indebtedness that will be partly yours if the other person walks.  Happens far to often when you least expect it.  Been there done.

Aug 21, 2013 10:19 AM
Michael Jacobs
Pasadena, CA
Pasadena And Southern California 818.516.4393

Hi Eric -- sorry to hear you are going through this.   Never - ever sign on as a co-signer --- everything appears great until it doesn't....

Onward and upward.  Stay positive.  

Aug 21, 2013 11:11 AM
Tammy Lankford,
Lane Realty Eatonton, GA Lake Sinclair, Milledgeville, 706-485-9668 - Eatonton, GA
Broker GA Lake Sinclair/Eatonton/Milledgeville

The only thing I can recommend in the meanwhile is to use annual credit report . com to check and instead of pulling all three once a year ( Transunion, Equifax and whatever the other one is) just pull one, wait four months and pull again ect... to make sure it is staying current.  At this point that's really all you can do.  BTW does he have a job now?

Aug 21, 2013 11:20 AM
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi
NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 - New Lenox, IL
708.921.6331 - 40+ yrs experience

Eric:  So sorry to hear of this latest issue.  Hopefully you can take heart knowing that your story might help someone else in the future.  They'll learn from your situation ... or at minimum think their actions over a little bit longer because they read what happened to you.  Hopefully this kid matures and grows-up a bit and makes those payments.  His mother sure did him no favors by letting him act the way he did ...

Gene 

Aug 21, 2013 01:00 PM
Chris Ann Cleland
Long and Foster Real Estate - Gainesville, VA
Associate Broker, Bristow, VA

I am sorry to hear you've been going through this mess.  Hopefully this stepson of yours gets his act together and doesn't take you done with him anymore than he already has.

Aug 21, 2013 01:00 PM
Liz and Bill Spear
Transaction Alliance 513.520.5305 www.LizTour.com - Mason, OH
Transaction Alliance Cincinnati & Dayton suburbs

Ouch.  Hopefully he puts on his big boy pants soon and gets with the program.  You shouldn't have to worry about this for an adult (by age anyway).

Aug 21, 2013 01:06 PM
Ellie Penaranda
239.776.5077 Downing-Frye Realty - Naples, FL
Naples Florida Real Estate - Waterfront & Beach Co

Eric, You are starting a new page and that should bring some positive in your life.  I've done my co-signing once and never again - like my best friend always tells me, no good deed goes unpunished.  Hopefully he will take care of his debt and you won't have to deal with it.

Aug 21, 2013 01:16 PM
Richard Iarossi
Coldwell Banker Residential Brokerage - Crofton, MD
Crofton MD Real Estate, Annapolis MD Real Estate

Eric,

You're going to come out stronger on the other side of these problems.

Rich

Aug 21, 2013 02:18 PM
Larry Brewer - Benchmark Realty llc
Benchmark Realty LLc - Nashville, TN

Hi Eric - good post about being careful with what you agree to, especially if the other party doesn't have a reputation for taking responsibility.

On the other hand, you now have control of your future. Make the most of it, your best days are still ahead of you.

Aug 21, 2013 10:26 PM
Russell Lewis
Realty Austin, Austin Texas Real Estate - Austin, TX
Broker,CLHMS,GRI

This just is NOT right...I am glad you are remved form a really toxic situatuation, so much better in the long run!

Aug 21, 2013 10:27 PM
Greg Nino
RE/MAX Compass - Houston, TX
Houston, Texas

Sounds like this "boy" needs the belt, regardless of his age. I am really sorry you're going through this. His mother needs to put her foot in his lazy behind. Punk.

Aug 22, 2013 01:32 AM
Alan May
Jameson Sotheby's International Realty - Evanston, IL
Home is where the hearth is.

hey, welcome to the land of the "exes"... you know why divorce is so damn expensive??  'cause it's worth it.

Aug 27, 2013 06:14 AM
Mary Yonkers
Alan Kells School of Real Estate/Howard Hanna Real Estate - Erie, PA
Erie/PA Real Estate Instructor
Ugh! Double ugh!! Eric, I appreciate the heads-up about signing for kids loans of any type. My sister has this problem with her own son. UGH!
Sep 01, 2013 08:32 AM
Eric Michael
Remerica Integrity, Realtors®, Northville, MI - Livonia, MI
Metro Detroit Real Estate Professional 734.564.1519

Sherry, thanks. It does suck, but it's getting better daily. PS. Love the new pic!

Cindy, it just bothers me that people will tell you one thing to get you to do something, then nothing.

Michael, that was the first, and last, time I'll ever do that!

Tammy, I advise everyone to do the same thing. One report per credit company every 4 months. And, no. Still nothing :/

Gene, that's why I wrote it. If I can save one person from going through this, it's worth it.

Chris Ann, he's an EX step son :) and whatever happens, happens. I've already made peace with it in my mind.

BLiz, you're right. There should be some kind of stipulation that if there's a divorce or whatever, the non parent shouldn't be held liable for this crap.

Ellie, "no good deed goes unpunished." That should be a t-shirt!

Rich, yeah, your're right. You know me. I'll be fine. Eventually.

Larry, thanks for the perfect comments. It'll work out one way or the other.

Russell, you're right. It's NOT right. And thanks. Things are getting better slowly but surely!

Nino, you're right. Sometimes I wish he'd just challenge me in the backyard, ya know?

Alan, I think of you A LOT these days. Hope everything is going well with you. I'm moving forward, taking baby steps.

Mary, it's a shame that people have to deal with this, but what are you to do after it's already signed?

Sep 08, 2013 11:31 AM
Anonymous
Claudia

What about if you don't co-sign and your spouse takes the loan for his kid -maybe even without you knowing-? Is it possible that you will be in the hook if they fail to pay? is there a way to remain detached (for lack of a better word) from this responsibility?

Jun 16, 2015 12:23 AM
#16