Student Loan Co-Signer Liability?
There is a clause in my private student loan promissory note that is co-signed by my sister that reads as follows:
“To the extent permitted by applicable law, I will be in default and you have the right to give me notice that the whole outstanding principal balance, accrued interest, and all other amounts payable to you under the terms of this Note, are due and payable at once (subject to any applicable law which may give me a right to cure my default) if: (4) any bankruptcy proceeding is begun by or against me, or I assign any of my assets for the benefits of my creditors”
This appears to be a very common clause and I was wondering, if I keep making my payments on time to them, how likely it is that they will come after me, or worse, my cosigner for the whole balance due, because I will be filing a Chapter 7 bankruptcy. I don’t understand why that clause is there because that is a non-dischargeable debt. Please help!!!
They have the right to pursue your sister if you file for bankruptcy and she will be responsible for the remainder of the balance. If you plan on making payment beyond the bankruptcy you should call them to make a formal plan so that they do not pursue your sister.
