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The Money Is Gone… So Is the Fiancé

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Q: My daughter and her ex-boyfriend got a loan, it was supposed to be used for her college but instead it was used to fix up his home. They were going to get married, but as soon as the money was spent, he kicked her out. She got the loan and he co-signed for it. Then he got another girlfriend and he said he wasn’t paying another dime.

She is struggling to pay for it and he is going on with his life. What can she do to make him pay his share? What is his obligation? Would it be in her best interest to let it go delinquent because her credit is already ruined because of this loan?

He changed his phone numbers so they can’t call him; they call her or her parents all the time.

A: When your daughter took out this loan, she agreed to be fully responsible for it, regardless of whether her ex (the cosigner) agreed to help with it. Since she’s the main borrower, and he’s playing hard to get, she’s likely going to be most heavily pursued for the balance. And really, that makes sense. After all, she did take out the loan.

She can try ignoring it, but she may be sued. If that happens and the creditor or collector gets a judgment against her, she could face even uglier consequences, such as having her wages garnished or money seized from her bank account. (The steps judgment creditors can take to collect vary under state law.)

It’s not clear whether this is a student loan, nor do you state the total amount. If it’s a student loan, she needs to do anything and everything possible to bring it current as quickly as possible. When student loans go into default, it gets ugly quickly.

If it’s not a student loan and she can’t afford the full amount, she may want to look at either settling the debt for a lump sum, or filing for bankruptcy if necessary. If she decides to negotiate, make sure she understands that she needs to get something in writing from the creditor or collector stating the terms of the deal before she pays. The letter should clearly state that she won’t owe any further amount once she’s paid the agreed upon settlement. You’ll also have to warn her that she may owe taxes on the settled debt.

She could try going after her ex for his “share” of the loan. If the amount is small enough, she can try taking him to small claims court. But even if she manages to win a judgment against him, she’ll still have to try to collect, and it doesn’t sound like that will be easy.

I suppose the best thing I can say in this situation is that at least she found out what he’s really like before she married him.

Image: KatB Photography, via Flickr.com

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  • BradB

    Fantastic advice Gerri. I was hoping to add some ideas, but you covered them all. At CreditSense we like the strategy of relationships keeping finances separate. Easy to avoid a lot headaches just like these. And if the relationship is working great and a couple falls on hard economic times they can sacrifice one credit score if necessary and still have the other score to be able to access credit when needed.

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