Go Back   The Finance Forums > Finance forums > Debt

Debt Discussions about debt and how to deal with debt.

Thread Tools
Old 10-22-2010, 11:08 AM
bushwhackdave bushwhackdave is offline
Junior Member
Join Date: Oct 2010
Location: MI, USA
Posts: 1
Default Cosigned daughters student loan, now shes not paying and I can't afford!! HELP!!

So it's a really long drawn out issue, but my father in law cosigned a bunch of student loans for his daughter and now she's not paying. THe Loans total 80 grand, and the can not afford them either. He is 53 and thinking about cashing out his 401k to pay them off. He has 120,000 and would get only 70 grand in a lump sum. Im trying to convince him not to do it, but he says it's the only way. What other options does he have? His daughter is not cooperating in any way. Really crappy situation. Can someone please help?
Reply With Quote

Old Sponsors
Old 10-22-2010, 03:51 PM
DavidBibby's Avatar
DavidBibby DavidBibby is offline
Super Moderator
Join Date: Jun 2010
Location: Palm Bay, FL
Posts: 415
Default Re: Cosigned daughters student loan, now shes not paying and I can't afford!! HELP!!

Like you said... this is a crappy situation. Anyone who has EVER co-signed a loan has regretted it. What is even more crappy is the fact that it's his daughter (not your wife right?)

I would not advise him either to cash out his 401(k) either because that is his future.

That said.. here's what I would do.

Immediately STOP all contributions to the 401(k). Keep the 120k there, but do not contribute any more. If possible, negotiate a new payment arrangement with the Student loan collectors.

Begin paying what he can on the student loans. If it's less than what they want... so be it.

In the meantime, he needs to invite his daughter to begin contributing and working out of this mess or he will be unable to support her anymore.

Money should never come between family members.. but this is not a money problem as it is a complete lack of respect on his daughters part.

So your father in-law has a couple of choices.

1) Do the "tough love" thing and break all contact, all support and all resources from his daughter, because she's obviously taking advantage of him. Then make payment arrangements on the loan to pay it himself.

2) Forgive his daughter immediately and make the payments himself and tell her he'll take care of it all, then never speak of it again. An expensive lesson yes, but if he wants a relationship with his daughter then the money's not important.

Which choice he picks would be entirely up to how his daughter treats him everyday. Which one would you choose?
Reply With Quote

Old 10-23-2010, 07:02 PM
sapphirecapital's Avatar
sapphirecapital sapphirecapital is offline
Senior Member
Join Date: Sep 2007
Location: Montecito, CA, USA
Posts: 364
Default Re: Cosigned daughters student loan, now shes not paying and I can't afford!! HELP!!

they can not go into the 401k even with a judgment, so keep it safe and untouched, grow some bigger skin, meaning get used to calls, discuss and agree to a low payment for the time me being, try to keep all the big item goods and goodies in a trust separate from you, sure if it comes down to it and he is loosing his house and there is no other resort he can use the 401k but that more or less means he will loose the money because the daughter will just apply for bankruptcy, while student loans are hard to discharge, interfamily loans are easy.
Answers are for general information only and should not be construed or relied upon as legal or financial advice.

Reply With Quote

Old 10-27-2010, 03:22 PM
cjscully cjscully is offline
Join Date: Oct 2010
Location: California USA
Posts: 90
Default Re: Cosigned daughters student loan, now shes not paying and I can't afford!! HELP!!

The big choice he has to make is how he wants to deal with the relationship with is daughter. If he wants to maintain it he's going to have to forgive her and deal with the lenders.
What the OP didn't mention is the reason(s) behind the daughters non-payment. If she has a financial hardship and can't pay, that's one thing. If she's just neglecting to pay because she's not managing her finances with a damn and won't change, that's something else entirely.
Since the situation is affecting his credit, he should talk to the lenders and find out about any hardship programs they might have available to lower the payments on the loans or defer some of them until others are paid off, etc.
The advice of stopping contributions to the 401k is good if it frees up sufficient cash flow for dad to make payments under modified loan terms. My experience is that student loans are relatively easy to modify in such a way that they can eventually be paid back.
Reply With Quote


Thread Tools

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off

» Boards

All times are GMT -4. The time now is 01:24 AM.

Powered by vBulletin® Version 3.8.5
Copyright ©2000 - 2020, Jelsoft Enterprises Ltd.