Question:
Dear Steve,
I applied for and signed my children’s names to their private student loans. They each have loans in the six figures.
The private loans was on their school website, right next to the federal loans. My husband and I believed we could pay them off and then the financial crisis hit.
I signed their names fraudulently, the schools never had them sign the loan checks, just gave them checks for their living expenses. I have been told that because of these irregularities these loans may be eligible for discharge. I worked with one Consumer protection group and paid thousand of dollars and then they went under.
Do you think that my signing their name, their not signing the loans checks at their schools, would be grounds for discharge of these loans. My son has tried to commit suicide, and my daughter is seriously depressed because they see no way out. I am interested in your service, but would that really get to the mistakes made by the banks. Thanks so much for your assistance.
Rhonda
Answer:
Dear Rhonda,
Wow. People never fail to amaze me.
I’m certain you thought you were being well intentioned in committing identity theft in the name of your children. So I say this with the most compassion I can muster at the moment, what the hell were you thinking?
This is a screwup of the highest order and I’m not surprised your kids might be a tad upset and that might lead to other issues.
If you really want to get to the heart of the matter, the banks are not the problem here. It sounds as if the banks processed your fraudulent loan applications and did what they said they were going to do.
The recourse your children have is to file a police report for identity theft and participate with law enforcement to prosecute you for your crime. That might give them a chance to break free from this debt. But maybe not.
I ran this situation past Richard Fossey who is both a lawyer and a university professor.
Here is what Mr. Fossey had to say, “The mother’s children might be able to honestly argue that they did not sign the student loans and did not know about them, but the private lender might still sue them on an unjust enrichment theory, arguing that the children should pay back the loans that enabled them to get their college education. I can’t imagine they would get much sympathy from a court.
Of course, both mother and children should be concerned that the lender might prosecute the mother for forgery or fraud.
Personally, I don’t think the children should try to avoid paying the student loans on the grounds that their mother fraudulently signed the loan documents without first consulting with a knowledgeable criminal attorney.”
So the bigger problem here is there are two forks to this situation. First, when it comes to the loans they may be eligible for a bankruptcy discharge but you would need to consult with a knowledgeable bankruptcy attorney in your state and explore the school, accreditation, the possibility of discharge under undue hardship, etc. You should read this article.
The second fork is the issue you committed a financial crime and your children are the victim of your efforts.
Even though you were well intentioned, your children did receive the benefit of your fraudulent activity and are now on the hook for the debt. That kind of reality might make the average person depressed or worse.
On the unlikely chance you want to straighten up the fraud on the loans, you can help your children report the identity theft by following this process.
I believe that when faced with such traumatic issues that getting this situation back to an honest foundation and dealing with it is going to be the best approach. Talk to a criminal attorney and decide what the consequences of your confession might result in and certainly get your children into therapy to help prevent them from hating you and screwing up their lives.
You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.
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