My sister signed our nephew’s student loans worth $ 35,000. When he defaulted, she paid them off. Should his parents repay her?


Dear Quentin,

I am the steward of my mother’s estate. I have three brothers and sisters. My mom is going to split her property equally between the four of us. However, there are two problems. My mom, one of my sisters and I signed student loans for one of my nephews.

After graduation, he got a job and everything was fine. He eventually lost his job and disappeared, leaving all student loans unpaid. He moved around, turned off his phone and did not answer text messages. Then we were pursued by his creditors.

We all paid off our loans to avoid problems with our credit ratings. My mom set up a will to deduct the amounts she paid from my nephew’s mother’s share before distribution to equalize her share.

My sister and son-in-law do not handle money well and cannot afford to get it back from their own money.

I paid less than $ 4,000, so I’m moving on. However, my sister, who is unmarried and has no pension, had to pay over $ 35,000 and was out of luck. I asked my mother to receive compensation from the income of our other sister, but mine nephew’s mother said it was not her problem.

I disagree, but I’m not going to ask Mom to go against her wishes. My only other thought is to speak on the phone with my sister, whose son defaulted, and her husband, and ask them to pay my sister $ 35,000 when they receive my mother’s will.

By the way, my sister and son-in-law do not handle money well and cannot afford to pay it back out of their own money. This has now become the cause of disagreement between the two sisters. what are you thinking about?

Hopeless aunt

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Dear aunt,

The simplest solution would be to rob Peter to pay Paul. Your mother deducts $ 35,000 from one sister and redistributes it to the other. It would be dishonest to deny a sister reimbursement after the death of a mother – provided that she died before her children. I have no hope that she will do it, no matter what your sister may say during this call.

Research shows that most people who ask to be released as co-signers on student loans because of outstanding debts on behalf of a student or alumnus are turned down. And while lenders tend to advertise a clause that they can be exempted if a student or graduate receives the latest payment details over a period of time, they rarely go to the co-signer to remind them.

Another complication as pointed out by my colleague Gillian Berman“Many private student loan contracts contain clauses that automatically put loans at a disadvantage if a co-sponsor files for bankruptcy or dies, even if the borrower makes payments on time, according to the Consumer Financial Protection Bureau.”

Your story should give pause to anyone who wants to sign a contract with a family member.

Your story should give pause to anyone who wants to sign a contract with a family member. Your compassion for your single sister’s predicament is commendable. But she must call your mother and protect herself, and also inform her nephew’s mother of her situation and her desire for the money to be returned somehow.

Private student loans require a co-author if the borrower has a low or no credit history. It’s like signing a mortgage or getting a credit card. Anyone who signs a loan agreement must – at worst – be willing to pay and kiss that money goodbye.

Do I believe your nephew’s parents will come to the plate if / when they have $ 35,000? Yes. Are they required by law to pay $ 35,000? Not. Are they morally obligated? I will let you and your sister answer that question. If your nephew’s parents agree to give up part of their inheritance? This is a bonus.

Whatever your unmarried sister chooses to do, she must be open, direct, and implacable. No more behind-the-scenes deals.

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