Financial Advice

How Can I Settle a Private Student Loan I Co-Signed For?

Question:

Dear Steve,

I consigned on a private Sallie Mae student loan for $6000 10 years ago. It has been taken over by Navient. The borrower has paid minimum payments, put it into deferment many times and has now stopped paying. Loan is 60 days past due. There is no contact with the borrower, who is living in Saudi Arabia.

As the cosigner, what are my options for negotiating a settlement? Do they have to sue the borrower first? Could I be sued for more than is owed?

Lisa

Answer:

Dear Lisa,

Do you know what the current balance is? You could be sued for that amount plus legal fees.

It is possible to negotiate a co-signer release.

As the co-signer you guaranteed the loan repayments. That’s the job of the co-signer even though many don’t understand that when they “help a friend” get the loan.

You can talk to Navient about a release but you may find better offers await you once the loan gets to be 120 days past due.

Since you have no experience in handling such a situation you might want to get a talented debt coach to guide you through this process. I would suggest contacting Damon Day for personalized assistance.

Steve Rhode

Get Out of Debt GuyTwitter, G+, Facebook

If you have a credit or debt question you’d like to ask, just click here and ask away.

This article by Steve Rhode first appeared on Get Out of Debt Guy and was distributed by the Personal Finance Syndication Network.

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