We are a married couple in our late fifties heading towards retirement. We co-signed for our sons private school loans a total of $60,000.
He could not pay them and we have been scraping along paying them every month and the balances seem to stay the same. We will be retiring at 62 and living on a fixed income of social security and air force retirement and a small 401K and we will not be able to pay them anymore.
Will the private loan creditors put a lien on our home?
The answer is a resounding maybe.
I wish I could be more definitive but what the lender decides to do and not do is really their prerogative and defined in the terms of the agreement you signed.
That being said, when you default it can present a new opportunity for you to work out a solution. You should read Top 10 Reasons You Should Stop Paying Your Unaffordable Private Student Loan .
According to the Defense Finance and Accounting Service, “Military retired pay is exempt from garnishment for anything other than child support, spousal support, or a property division under the Uniformed Services Former Spouses’ Protection Act. It is exempt from garnishment for the collection of commercial debts.”
So while your retirement benefits could not be garnished, and your Social Security would not be garnished over a private student loan, a possibility always exist for the lender to sue you, win a judgment and try to get a lien on your home. However, maybe there is some state law that might prevent this. To check, make an appointment with a local attorney who is licensed in your state and discuss your situation.
Before you panic about this, remember, defaulting on your private student loan can open the opportunity to negotiate a solution. Just make sure if you default you are doing it with a plan in place and an expert to assist you in working out a solution that is agreeable to you and the lender.