I co-signed for a Parent Plus loan for my daughter a few years back. Roughly $45,000 now. She wasn’t able to keep up with the payments and didn’t really know how to handle the situation so now it’s in the hands of an attorney’s office. I don’t have $45,000 laying around that I can just pay it off,
What are my options? Whats the worse that can happen with this situation? How do I fix this problem?
The moment you cosigned you accepted full financial responsibility for the loan if your daughter could not make the payments. The lender can come after you for the money due.
The worse that can happen is that you can be sued and get a judgment against you. Since this is a federal loan though you could get an administrative wage garnishment against you without going to court. Additionally, you may have tax refunds intercepted.
But all is not lost here. What you might want to do is consider rehabilitating this loan and getting it our of default. After nine consecutive payments the past negative history would be removed from your credit report. For more information on loan rehabilitation, click here.
Maybe you and your daughter together could make the full monthly payments and that would at least get you backed out of the current situation and she can pay you what she can afford.
Please post your responses and follow-up messages to me on this in the comments section below.