My stepson had his father cosign a loan for him about 5 yrs ago. He left school and was active military, now reserves. He is gainfully employed & in default on his loan. Sallie Mae is now pursing my husband for payment because he makes the higher income, even though my stepson has the ability to pay. What can we do to get them to go after him first?
Answer
That is what co-signing means. Co-signing is BAD. By co-signing, what the co-signer is in effect telling the lender is "go ahead and make the loan because if the borrower does not pay, I will." The lender does not have to go after the primary borrower.
They are not pursuing your husband because he makes higher income. They are pursuing your husband because he is a co-signer and because he is available. Your step-son is in the military and the Servicemembers' Civil Relief Act (SCRA) provides your son with protections while he is on active duty. Although if the stepson is only in the reserves that should not be a factor.
If your husband does not pay, then his credit will take a nosedive. However, its not his debt. He will have to decide. He really needs to have a chat with his son. It was a lousy thing for the son to do. Also, your husband might want to have a talk with his son's commanding officer. Even if his son is in the reserves, there is a commanding officer.
Military personnel, even reservists, have to be of good moral character. And the son may have a security clearance which could be in jeopardy if the commanding officer found out the son was not paying his bills. Periodic reviews are done and credit reports pulled so they will find out eventually anyway.
If your husband pays off the son's debt to protect his own credit then he can sue his son for reimbursement.
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