Bankruptcy Finally Ends Father’s 4-Year Struggle To Repay Dead Son’s Student Loan

Back in June, we told you about the California man who had spent years trying to sort out his late son’s student loans, only to keep running into dead ends and and roadblocks. Now, after four years of struggling to figure out how much is owed and to whom, he’s finally getting some relief.

ProPublica provides an update on the father, who earns around $21,000 a year in his job as a gardener.

When his son died only a few months after graduating college in 2008, the small amount of federal aid he’d received was discharged. But since the dad had cosigned on the remaining private loans, he was on the hook if the private lenders opted to keep the debt alive, which they did.

But the father and his attorney were having trouble just finding out the size of these loans, as they received calls from multiple debt collectors representing various lenders.

One loan that started out at Bank of America had been sold off to a company called First Marblehead, which then handed it off to its National Collegiate Trust division. The company was not responding to the father’s requests or ProPublica’s attempts to get comment.

And that lack of communication worked to the father’s advantage in November, when a bankruptcy court discharged the National Collegiate Trust loan because of the institution’s failure to respond to the complaint.

The other loan is still a bit of a mystery, and ProPublica has attempted to timeline how a student loan made with a now-bankrupt business called Education Finance Partners eventually ended up in the hands of a fund set up by the Swiss central bank to stabilize UBS to keep it from crashing.

The fund, cheerfully named StabFund has since reached an agreement with the father’s attorney, but it’s not known how much the father will have to pay on this loan, as all involved parties have signed a confidentiality agreement.

The father’s lawyer explains that so much of the hassle in reaching a resolution on matters like this is because so many parties get involved in trying to collect the debt.

“From an attorney’s perspective, when you try to settle or negotiate, the real problem is figuring out who you’re supposed to be talking to,” he explains. “If someone is calling the client and harassing them, you’re not sure that’s who you’re supposed to deal with.”

As always, this father’s story is a reminder of the hazards associated with cosigning on a loan, even for a loved one. Before you cosign, you need to ask yourself whether or not you’ll be able to pay back the full amount of the debt in the case that something happens to the borrower. If the answer is no, then you probably shouldn’t cosign.

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