Co-Signed Student Loans

I co-signed for my Niece for a student loan (SallieMae). She refuses to pay. Who will they try and collect from first? Thanks.

One Response to “Co-Signed Student Loans”

  1. Jeff Jenkins

    When family members need a little financial help, you always want to say yes. Unfortunately, when things go wrong, that also makes dealing with the fallout a lot harder.

    If you signed on to a debt as a guarantor, the lender would pursue collection from the primary person on the loan before turning to the guarantor. Co-signing works a little bit differently. Because you and your niece are both co-signers on the student loan, you are both liable for the entire amount and the lender can try to collect from both of you or either one of you. In situations like this, we do not normally see a “pecking order” in terms of who they look to first. There is nothing that I am aware of that would legally require them to go after one party or the other first as you are both jointly liable on the debt.

    If they try to collect from her first and don’t make any progress, they’ll turn to you. You may choose to pay and deal with your niece privately. If you don’t pay, they can file a collection suit against both of you and get a judgment in their favor. With a judgment, they’ll be able to get a court order to garnish your wages or levy your bank accounts if you don’t pay.

    Nonpayment of debt that you co-signed will show up on both your credit report and your niece’s.

    I hope this answers your question.

    Jeff Jenkins


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