Hello Personal Finance! Long time lurker, and just want to say thanks for all of the thoughtful responses and helpful information in this sub. The sad situation is this: My Dad had started a new job, and the bank wouldn't let him co-sign for my sister's student loans (they wanted him to have at least a year in that position). It turned out that I was the only one in my family that had been in my job long enough to co-sign the loan. I received about $3,000 a year from my parents for college, but they were unable to help my younger sister. I agreed to sign the loan, which if I recall, was for about $8,000 all told. I know that you all advise against co-signing for loans, but I just couldn't refuse my parents because they've done so much for me. I know it's inadvisable, believe me, but that's water under the bridge now.
Fast forward to last week. My sister decided about 8 months ago to "live her own life" which means leaving her very kind (and now distraught) husband. She is mostly estranged from my family due to various issues related to her irresponsibility. Her husband has been wonderful, and has continued to pay her loans as much as he can. However, their divorce comes through this week, and he will no longer pay. My parents co-signed for I think around $40,000 of loans, and those loans are already behind and my Dad is getting stressed out by calls from the bank. Dad and Mom are both working and taking care of my elderly grandmother, but can barely make ends meet. If creditors come after them, it would ruin them completely. They have very little saved for retirement, but are trying hard. My Dad is great with money and taught me well, but definitely knows he made a mistake in trusting my sister.
My questions are as follows:
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What can I do to get out in front of this student debt train heading towards us? I'm assuming my sister will just let us take the fall for the loans.
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My sister has moved and I don't think the bank has her new address. Is there any way I can get this to them without giving them my information? I don't want to get phone calls.
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If debt collectors call, are there clear resources or a checklist of steps I can give to my parents to help them know what to do? They are very responsible with money which is why they have stayed afloat with not much income, but they have no idea how to deal with debt collections / creditors.
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Any idea of timeline for a loan to be sold to debt collectors? Just trying to figure out how much time we have before this all starts.
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Would refinancing her loans remove our names from the debt? Sister has very little income so I'm guessing that would be an issue, as well as how behind the payments are for the large loan. My loan is less, and payments are more current so could that be one avenue to explore? I'd want all of the details in order before I try to contact her, but I'd talk to her if it was a possibility.
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Maybe a bit off the wall, but I now work for the federal government (3+ years). I already paid off my own student loans, but could these loans be eligible for forgiveness since they are technically my loans too?
Thank you for all of your help, and please let me know if there's anything I didn't ask but should have asked. I'm sad about the broken relationships, but devastated that my sister can't seem to see what she's doing to my parent's finances. My Dad turns 60 this year and at this point, will never be able to retire.
TL;DR Parents and I co-signed for sister's loans and she is not paying. What can we do? More specifically, what steps can I take to help my parents?
Edited: Sorry, I suck at formatting.
Submitted July 12, 2017 at 09:50AM by sadcosigner http://ift.tt/2t3NQgO
