Can I Really Discharge My Student Loan Cosigner Liability in Bankruptcy?

“Dear Steve,

I am currently filing for Chapter 7 bankruptcy in TX. A large amount of my debt comes from being a co-signer on multiple private student loans for my son.

He graduated Dec 2008 with a finance degree as the economy was headed down. He was not able to get a job for more than 1 year. He worked for 2 years for a CPA, then lost his job after a car accident in 2012 and hasn’t found work since.

Meanwhile I lost my job in 2011 and was unemployed for 9 1/2 months. When I did get a job, the pay was $11,000 less than my prior job. Now I am unemployed again.

My son wants to see me relived of the burden even if is he is not. We still have numerous government backed student loans to pay. The attorney I hired for bankruptcy has indicated that there is a small chance of discharge, but his staff seems to think it’s very improbable.

Would our situation be considered undue hardship? My attorney has not indicated that any additional paperwork needs to be filed to claim undue hardship. Any advice?


Dear Sherry,

My personal opinion is there has been some pretty good cases showing how the cosigner liability can be discharged in bankruptcy. See these articles.

In fact I think this recent article where a man was able to discharge half a million dollars in student loans he was obligated for because of an economic downturn is much like your story.

At the very least, my observation is the student loan lenders may come to a better repayment agreement and even elimination of some of the debt if the complete elimination of your liability is not granted by the court.

I think you have a compelling story and if you have attempted a good faith effort to repay the loans and can’t, the bankruptcy court appears to be more open to the elimination of student loan debt liability under a hardship situation.

See also  Private Loans For Unaccredited School Not Student Debt in Bankruptcy

The bad news is your bankruptcy attorney may have to file an adversary proceeding to get a final determination on this matter and they may be unwilling to do that. It can be an expensive process.

You might want to send your bankruptcy attorney, this link and let his staff look at some of the recent cases and other information.

Please post your responses and follow-up messages to me on this in the comments section below.


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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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