“Dear Steve,
I have 4 student loans and two are private loans thru Wells Fargo and American Educational Services.
They bot are default and they are about $45,000. I don’t make enough money to pay the loans. My salary covers basic needs and car payment.
I had cosigner who passed away a month ago?
What will happened with my default loans that I cannot pay of and my cosigner died?
Nina”
Dear Nina,
I’m sorry to hear about the recent death. I imagine that person must have been close to you to have cosigned.
Technically I suppose the student loan company could look to the estate of the deceased person if you were in default now. I’ve not heard about that happening though. Once their estate is probated I would imagine that would end that claim.
In a rather perverse way, this actually works to you advantage in the future of the student loans become unmanageable.
The first thing I would do is make sure the student loan companies receive a certified copy of the death certificate of the cosigner and inform them of their passing. This will clean up the account records now and prevent any angst later.
In the future, if yo were to default on your student loans and the statue of limitations passed on the lender pursuing you, the private student loans could be discharged in bankruptcy.
If you are struggling with the payments on private student loans the only payment plans available are whatever the lender offers. Unlike government backed loans, with great repayment options, private student loans have few.
For your government student loans I’d consolidate them and get on an income based repayment plan. Your payment on those might be as low as $0 on the government loans.
If you contact the private student loan holder and they are not able to work out a payment plan you can afford and you go into default, the loan holder can send the account to collections, tack on a 25% collection fee. add late fees and additional interest, and garnish your wages.
If repayment is looking unlikely on the private student loans, I’d suggest meeting with a local bankruptcy attorney and discuss with them the timeline for dealing with the private student loans. You can click here to find a local bankruptcy attorney and meet with them for free.
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