Real Estate, etc... by Eric Michael: Think Long and Hard About Co-Signing for a Step Child's Student Loan

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

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.

 

Eric Michael, Real Estate Professional
Remerica Integrity, Realtors
41000 W. 7 Mile #105
Northville, MI 48167

Cell: 734.564.1519

Fax: 248.912.9996

www.ShortSaleInfoMI.com

www.EricMichaelOnline.com

Comment balloon 16 commentsEric Michael • August 21 2013 04:31PM

Comments

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!

Posted by Sherry Scales, Realtor, for Austin, TX and surrounding areas (Austin Texas Homes, LLC) about 7 years ago

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.

Posted by Cindy Jones, Pentagon, Fort Belvoir & Quantico Real Estate News (Integrity Real Estate Group) about 7 years ago

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.  

Posted by Michael Jacobs, Los Angeles Pasadena 818.516.4393 about 7 years ago

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?

Posted by Tammy Lankford,, Broker GA Lake Sinclair/Eatonton/Milledgeville (Lane Realty Eatonton, GA Lake Sinclair, Milledgeville, 706-485-9668) about 7 years ago

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 

Posted by Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi, 708.921.6331 - 40+ yrs experience (NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656) about 7 years ago

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.

Posted by Chris Ann Cleland, Associate Broker, Bristow, VA (Long and Foster REALTORS®, Gainesville, VA) about 7 years ago

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).

Posted by Liz and Bill Spear, RE/MAX Elite Warren County OH (Cincinnati/Dayton) (RE/MAX Elite 513.520.5305 www.LizTour.com) about 7 years ago

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.

Posted by Ellie Penaranda, Naples Florida Real Estate - Waterfront & Beach Co (239.776.5077 Downing-Frye Realty ) about 7 years ago

Eric,

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

Rich

Posted by Richard Iarossi, Crofton MD Real Estate, Annapolis MD Real Estate (Coldwell Banker Residential Brokerage) about 7 years ago

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.

Posted by Larry Brewer - Benchmark Realty llc (Benchmark Realty LLc) about 7 years ago

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

Posted by Russell Lewis, Broker,CLHMS,GRI (Realty Austin, Austin Texas Real Estate) about 7 years ago

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.

Posted by Greg Nino, Houston, Texas (RE/MAX Compass, formerly RE/MAX WHP) about 7 years ago

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

Posted by Alan May, There's no place like home. (Jameson Sotheby's International Realty) about 7 years ago
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!
Posted by Mary Yonkers, Erie/PA Real Estate Instructor (Alan Kells School of Real Estate/Howard Hanna Real Estate) about 7 years ago

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?

Posted by Eric Michael, Metro Detroit Real Estate Professional 734.564.1519 (Remerica Integrity, Realtors®, Northville, MI) about 7 years ago

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?

Posted by Claudia over 5 years ago

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