Many will provide an initial consultation at no cost. You can call the State Bar in the state where you live for referrals.

Your problem seems severe and needs professional advice, not what random people might offer, no matter how well intentioned.

I’m sorry all this happened to you.

student loan providers will let a borrower do this? If that were possible then it would put the debt burdon on your SIL which would then change everything for him and y'all.

Damn. What a fucking mess. I am so sorry.

Last edited Thu Mar 21, 2024, 07:50 PM - Edit history (1)

The situation sounds like a financial fiasco and It sounds like you were pulled in with the best intentions and love for your daughter - but something is missing here and that you and your wife did not have all information when you were happy to step in and help.

Are there grandchildren or do they have no children?

Were the student loans taken out before or after your daughter married? Are they all for him or also for her education? Were they cumulative over time or taken out at once? Are the loans at a variable or fixed rate?

What were the Son in Law’s total student loans and over what period of time and at what interest rate? Were they done originally through MOHELA and consolidated?

What was the purchase price of the home and terms of the home mortgage and rate? Were they both on the title? Was the $20K a gift to your daughter or a loan- or gift or loan to both of them?
Do you in fact know it was used as a down payment for the home?

What kind of car did they have (year, model) and what kind of payments did they have? How long had they not been paying before it was repossessed?

What kind of medical insurance do either of them have? How were either of them paying for their medical costs? What state are they in - are they able to qualify for Medicaid?

What is the “private loan outfit” Discover? Is this the credit card company Discover? Is this the student loan servicing company?

What kind of co-signing of a loan did you do? Do you have a copy of that agreement? Is it for the full amount of all loans?

There is so much there and it’s nearly impossible to give any advice without more details.

There are no grandchildren involved, thank God.

These were taken out over a period of years after she married. I don't know the technical details on variable or fixed, etc. Interest now seems to be horrible %25.

Don't know about MOHELA. Total private loans through Discover now total $74,000. The amount keeps going up so I am not sure what the original amount was.

Don't know many details about the home purchase except it was over $200,000. We are sure the 20K went for the downpayment.

I believe it is a 2017 Jeep and the last payments were $500 a month. They were not paying for a year yet did not tell us.

They have no health insurance. Ours is a red state. They are in the "sweet spot" where their door dashing earns them too much for Medicaid and the gov exchange is too much to afford. They have applied at DHS but have not heard definitively one way or the other.

Discover is the credit card company, I think. They suck.

We have no reason to think they have been dishonest with us. He got a very good job and worked there for over two years. Another company bought the business and he was laid off. He was working on post graduate degree when the hammer fell. They are young and don't seem to realize the consequences of there actions, etc. Not that unusual. We have just been caught in a terrible trap because we love them and wanted to help. If he had not be terminated as he was this would not be an issue. He was not paying while in school. Whether the amount kept going up or not I don't know. He was in a program for awhile where the payments were less than $700 a month. That program has ended even though they are homeless and Discover will not extend it. If we pay for 6 months he can not pay for 6 months but I am convinced the amount will continue going up.

Thanks for your response. I am sorry I cannot offer more info.

25%……!!!!!!!! That’s an insane interest rate and the principal even at $800 a month will be your lifetime!



Theophilus - I am first of all very sorry and sad hearing these details and knowing the stressful situation that you find yourself in right now. I want you to know that everything I am sharing with you is heartfelt and well intentioned and there is no blaming, judgement or shaming and all advice being shared comes from only a desire to help you get out of this mess.

If we just deal with the situation and the facts - some of them are really shitty and there are not many good options and some of the decisions that need to be made will require some sacrifices by everyone and changes and real consequences if you are to resolve this and have a positive outcome. If you do not - I’m sure you realize that it can and will get much worse.

I am certain you did what you did in co-signing the student loans out of love and to help them get started. Sadly - you having just paid for his school at the time yourself or given a personal loan at low interest would have had better return - but that is past.

If the son in law had taken out a federal loan through the schools - the interest rate would have been between 4.5-7.5% fixed (depending on when it was taken out) and under the current SAVE program, anybody making below $45K annually would pretty much have $0 payments indefinitely until making more and then it gets readjusted. But that’s also not an option since this is a private loan. And had the loans been taken out before marriage, your daughter would have had no liability for that debt since it’s for his education and that would be the case upon his death or divorce and not being considered marital liability. But that’s also not the case and she does have that liability since it happened in marriage (although some states - like California have at times ruled that the individual who received the education and can take the future earning potential with them that the spouse does not have to be responsible for the student loan debt of the other).

I am not Suze Orman or a financial planner - but co-signing loans - especially without any secured asset to have a stake in - are to be avoided - especially not just because of the risk - and because if the primary borrower defaults - the co-signer is on the hook. But at least with most loans - they can be dismissed in bankruptcy - but NOT student loans. And where usually a student loan liability disappears with the death of a person - it doesn’t for the co-signer. But you probably now know all this.

I don’t know the ages of your daughter and son in law - and while grandkids can be the greatest joy - yea - thank goodness that this situation doesn’t involve them having children at this time.

The health insurance situation and being in a red state with no Medicaid is really scary. The top thing that can bankrupt anyone is if they have a medical health emergency - I think it’s criminal that red states do this to the least fortunate of their citizens. In California where I am from - Medi-Cal (the name of the Medicaid program) is truly top healthcare and everyone from kids to adults has it if they can’t afford or have healthcare. In San Francisco, anyone who works at least part time - they are provided healthcare by their employer by law - even if they are Doordash delivery workers part time.

Your daughter and son in law have now lost the means of earning any money and transportation with the car repossessed - so now they have no income? You stated that they are living with his grandmother - not sure if it’s rent free or that she has a car for their use to earn money - but I have concerns - I’m assuming because you co-signed - and not his parents and there is no mention of them - that they are not in the picture or option for assistance. But is being supported by an elderly grandmother a long term option? Does she own her home and have the means and plans to bequeath the house or assets to him? Could she pay off his loan and have you then be relieved of this burden? Could she then have a loan agreement with him and essentially be giving him his inheritance up front?

Your daughter is your child and always will be. She may have made mistakes while a kid or young. But she and your son in law are adults now. And you and your wife worked hard and saved your money for retirement and are on a fixed Social Security income. (Income which by the way can be garnished by Discover should they come after you for the liability of the $74,000 at 25% interest.). This is scary as hell because you are looking at endless monthly payments of $800 indefinitely through retirement and garnished Social Security payments if you can’t pay. And your wife would inherit this debt upon your death as a marital liability. This situation needs to be remedied immediately. And if you can’t take care of yourselves - who will - apparently not your daughter.

I would get some professional consultation - hopefully you can find some free advice consulting. Bankruptcy doesn’t seem to be an option - and even if your daughter and son in law declare bankruptcy - it doesn’t get rid of the debt for you - and you can’t declare bankruptcy - so only after your deaths and your estate might avoid it.

An option to consider - although you said your wife would rather die (I hope not - seriously - because you would not have her or her have you - and the surviving spouse still left with that debt) is to first see if you can refinance this student loan debt from a bank or home equity loan at a much lower rate to lower the payments. I would then have a loan agreement drawn up with your son in law and daughter and have them pay you back for the $74,000 at a low monthly payment that they can afford - maybe $300 a month. If you can’t get a bank loan or home equity loan - then if you had to take it out of your IRA savings investments - even if that reduced your nest egg - you at least won’t have an $800 a month payment indefinitely or have your social security payments garnished. And again - draw up a loan agreement that your son in law and daughter pays you back monthly over the next 25 years. You can always forgive the loan someday if you want - or there is less inheritance for your daughter - but you will be protecting yourself. And your credit won’t be tied to your son in law and daughter for perpetuity.

They need jobs and health insurance. If they can earn with doordash - but need a car - they need to figure out how to do this. I would not ever co-sign a loan for either of them ever again - and if you chose to give them access to your car and insure them - I would also require them to pay you for that use and pay you monthly along with the other loan payment from their earnings. Maybe it’s another $300 a month - for a total of $600 to you monthly - 6 nights of doordashing - one week. Maybe one of them can find a public service job or government job and have insurance provided to them that covers both. Or one door dashes while the other can work a job that gets them healthcare. Somehow they need to figure out how to care for themselves and their obligations and self-care. Unless you are able and willing to cover them in perpetuity. And if so - that’s your call and decision - no judgement.

But you and Mrs Theopilus need to be protected from becoming homeless and in financial debt and distress. And this $74,000 has the potential to do this to you and has to be removed and eliminated.

I really hope you can get this resolved and find peace.

All said with love and good intentions for all of you.

Xoxo

I would get a very good attorney asap. At the very least you may be able to get the loan payments reduced. This lender may be on a watch list for providing bad loans.
Let us know how it goes.

https://www.consumerfinance.gov/about-us/newsroom/cfpb-orders-discover-bank-to-pay-18-5-million-for-illegal-student-loan-servicing-practices/

I think a good Bankruptcy and Consumer Protection attorney is needed here

...Has your son-in-law explored the income-based repayment option named "SAVE" recently enacted by Biden?

Monthly payments are based on the borrower's income and are intended to be managable within that income.

https://studentaid.gov/articles/6-things-to-know-about-save/#lower-monthly-payments

The Federal Student Loans do NOT require co-signers.

This appears to be Discover Private student lending.

The SAVE program (which is fabulous) only applies to Federal Loans.

I asked for the OP to provide more details - this is a clusterfuck and based on what is provided it feels as if there is a combination of predatory lending, misrepresentation and misappropriation of funds by Son in Law and daughter and putting two retirees in a hopeless situation that may only be solved with a good Consumer protection attorney and bankruptcy to protect the retirees.

The Son in Law and Daughter May have to handle this separate and their situation a far greater mess needing other intervention beyond bankruptcy….the immediate concern is for our DUer and his wife.

Edit to add:

I believe the Biden administration has also done good work providing relief for victims of predatory student loans, perhaps this situation may fall within that category.

https://www.consumeraffairs.com/finance/discover-student-loans.html

Scroll down through the reviews…..they are very bad actors

Note - this has nothing to do with the Biden Administration - they really have been doing great things to help students - I have seen it first hand with my daughters.

The Biden administration has been looking into predatory lenders like Discover….again - the OP needs to get an attorney and be looking at options.

So it has a LOT to do with the Biden Administration, they have been absolutely wonderful in fighting hard for relief of disasterous student loan debt.

Against strong opposition, Biden has been a saviour to MANY folks who were being crushed by student loans after trying to reach educational goals and he is still fighting hard.

That massive relief has EVERYTHING to do with the Biden Administration.

I will come back to give some input when I'm more awake.

I'm so, so sorry....