Co-signers & Charge Offs

How Do Charge Offs Effect Co-signers?

As a co-signer of a student loan, the original loan recipient has not been making payments and the loan is now delinquent.

When I checked my credit report, I saw this financial institution has listed three charge offs in relation to that loan.

In speaking with a representative, they informed me interest is currently ongoing for the life of the loan.

How is that possible?

Sheresa

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A charge off is an accounting entry on the bank's books. It has to do with its loss reserves.

It does not mean that the bank cannot continue to pile on fees and interest and take whatever action it feels necessary to collect on the loan.

If this is a federally guaranteed student loan, it is not dischargable in bankruptcy. Congress has also decided that private students loans can't be discharged in bankruptcy.

[Congress in 2005 added private student loans to the list of non-dischargeable debts.]

As a co-signer you are in the same shoes as the original borrower. You have to repay the loan. If you don't your social security benefits can be reduced.

It's in your best interest as a co-signer to settle with the lender and try to put this past you. If it is not a federally guaranteed loan, check with a local attorney or credit counselor to see if it is enforceable.

There have been a lot of scandals having to do with trade schools and student loans and this might be something to look into.

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