[TX] Parents being sued for my student loans, what now?

Posted by ThePantsThief@reddit | studentloandefaulters | View on Reddit | 4 comments

My dad co-signed on my loans. I had been keeping them in deferment indefinitely for a while but at some point I forgot to make the quarterly phone call and they went into default. The loans total almost $250k.

My parents got a packet in the mail of what looks to be court filings. It says "State of Texas vs [my dad]" and starts with PLANTIF'S ORIGINAL PETITION. The top corner says "Filed" with a date back in November. These are not federal loans, but private loans, so I'm a little fuzzy on why the actual state is suing us.

I'm leaving the country within a year so I'm not worried about myself, but my parents have some savings—maybe ⅕ of what is owed—and my mom has a pension. Texas is a no-garnish state so that's good, but what is actually at risk, and what should we do now?

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magicandfire@reddit

You can't keep private loans in deferment indefinitely. They usually give you up to a year or so total unless you're a full time student still in school. They're suing your cosigner because the lender thinks they can get more from your dad than you, as I'm assuming you don't have any assets/cash sitting around. You two are equally on the hook for the loans.

Were you guys not getting scary phone calls like 3 times a day and having your credit tank? This doesn't just sneak up on you. My credit was down in the 400s just from being a few months delinquent from College Ave, not even defaulted.

Option 1: your dad needs a lawyer ASAP. There should be a date that he needs to respond by, otherwise the lender can get a default judgment against him which is the absolute worst case scenario because it's an auto-win for the lender and they can help themselves to whatever they can get from your dad, depending on your state's laws. They may not be able to garnish wages, but they can still put a lien on your dad's house or gain access to your dad's non-retirement bank accounts, or other assets he may have.

Option 2: YOU need a lawyer. You (not your dad) could declare chapter 13 bankruptcy if you're in a position to do so, assuming you're already broke. That would buy you 5 years of time to figure out your settlement plan and will mature the loan as well, giving you some leverage for settlement later. They wouldn't be able to go after your dad during that time because of the codebtor stay. At the end of that period, you would need to either figure out a repayment plan with them or a settlement. Or you'll be back at square one.

You need to educate yourself on this a lot and quickly. Wiping out your parents' entire savings would be terrible.

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ThePantsThief@reddit (OP)

My credit has been largely unaffected.

As I said before, I do have them on indefinite deferment. I still have my federal loans on deferment, and they're in good standing. I graduated 7 years ago. I'm not surprised by any of this and I knew it was coming ever since I forgot to restore my deferment before the loans went into default. I've been expecting this

I've lingered on this sub for a while so I'm not a total noobie when it comes to this stuff; I know we need an attorney, but I'm mostly curious what an attorney's plan going to be: settle? Protect my dad's assets somehow, like moving savings into retirement accounts? Something else?