If you have a co-signer on your student loan, it is probably a private student loan. Private student loans are just unsecured consumer debt, except they are not dischargeable in bankruptcy, at least without the borrower showing "undue hardship," which can be very difficult to show.

Notably, there are not the "income-based" repayment options for most private student loans, as there are with federal student loans.

When a person co-signs a loan, they are promising to be financially responsible for the loan if the primary borrower defaults. When a co-signer signs the "promissory note" to be responsible for the loan, they agree to be "jointly and severally liable" for the entire amount of the loan.

In some cases, co-signers may be able to be released from liability, once the primary borrower has made a certain number of payments, or after a certain period of time. Contact your lender or loan servicer to see if that is an option.

And always review your loan papers carefully, preferably before you sign them! If you don't understand them, consult an attorney of your choice.

Worst case, if you default and a private student loan lender, servicer or collector is pursuing you and/or your co-signer, it is possible to file chapter 13 bankruptcy, and propose to pay the loan over a 3-5 year period through a chapter 13 plan. In chapter 13, there is a "co-debtor stay" that protects co-signers from collection actions, at least so long as the debt is considered a consumer debt, and the chapter 13 debtor proposes to pay the entire loan, with interest.

If you want to explore this option, or if you want to consider other ways of dealing with your co-signed student loans, and you are a resident of the Houston, Texas metro area or surrounding counties, call our office and make an appointment at 713-772-8037.

J Thomas Black
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Board Certified, Consumer Bankruptcy Law- Texas Board of Legal Specialization