Question:
Dear Steve,
When I first signed up for Younomics (formerly MyRichUncle) I had a close relative co-sign with me. At the time, we really didn’t understand that the loan was a private one and not a federal one that can be deferred if problems arise. So of course, problems arose and I haven’t paid on it for almost 7 years.
But now, my co-signer applied for an unrelated private loan and that company is asking why the Younomics loan hasn’t been paid. My co-signer is now thinking of making payments towards it so the new loan can be approved. However, in January 2020 (5 months from now), the student loan will be off the credit reports.
Is it wise to restart payments on it and would the new loan catch on early enough to know that there’s a payment being made on the old one? Or should we do more research before paying? As one of the readers mentioned on this site with a similar Younomics situation, my state’s SOL is 4 years, so maybe it’s not payable anyway?
Frustrated Borrower
Answer:
Dear Frustrated Borrower,
You’ve actually got a few different issues going on here with competing interests.
I think there are some real concerns that the Younomics loans can’t be verified and the documentation has been lost to prove the loan is valid. Debt validation is a legitimate consideration for this old debt. But that can take time and can get messy.
An out of statute debt is interesting but the fact the debt is outside the Statute of Limitations is something you would have to raise in your defense when you are sued over the debt.
Even the fact the loans may be dropped from your credit report is interesting but immaterial.
Waiting for the loan to fall off the credit reports is something to consider but just because it isn’t listed does not mean that you can’t be sued over the debt or collections attempted. Collectors have been known to relist old debts and make them appear again. Currently, collections can be attempted on debt outside the Statute of Limitations.
None of those above issues have any role in reducing the liability of your cosigner. Their motivation is to divorce the debt so they can get a new loan.
The role of the cosigner is to be a person that is 100 percent liable for the repayment of the debt but have none of the benefits of the loan. If anyone ever asks you to cosign for them – DON’T!
You are correct, payments or even acknowledging the loan to the current debt owner can restart the Statute of Limitations clock.
But waiting to be sued over the debt to raise a Statute of Limitations defense isn’t awesome either.
Your cosigner also needs to consider that making payments will not bring the loan out of default. It is unclear how much of a factual benefit that can deliver.
It is not unusual for a long developing situation to become an urgent problem when someone wants to get a new loan. All of a sudden it becomes a barn on fire that needs to be dealt with right now. But this situation does not have an instant solution as you can see.
Ultimately I think the best solution is for you and your cosigner to maybe consider having a conversation with my debt coach friend Damon Day to better understand the overall facts and then come up with a solution you and your cosigner agree to. Damon has experience in dealing with these very problematic loans.
But all of that being said, that’s just me. I prefer to make decisions based on fact rather than emotion.
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Question asked.
Answered.