Should I Sue My Child Over Co-Signed Loan?

Dear Dr. Don, If I was co-signer on a student loan for my daughter five years ago, can I sue her for the payments I've made on her student loan? She never made a single payment on the loan. She withdrew from school. She makes no effort to find a job, and meanwhile I'm handicapped and in a wheelchair.

Thanks,-- Lois Litigate

Dear Lois, The loan agreement you co-signed is with the lender, not your daughter. While she is the primary borrower on the loan, as co-signer, you agreed to make the payments if she did not. If you co-signed the loans, you are every bit as obligated to make these payments as she is.

In corresponding with you about the loans, you told me that there were four private student loans totaling $15,000, taken out between August 2004 and December 2005, and that the current loan balance is $7,800. You said that you remember co-signing on only one loan, in November 2005 for $3,250. You mentioned you were on disability for a five-year period, but you indicated you are off disability now and working full time, and you were working full time when your daughter took out these loans.

I can't give you legal advice, but suing your daughter for back loan payments sure sounds like a losing proposition. In an earlier column, I discussed what might happen if a parent's signature was forged as co-signer on a student loan. You do have legal remedies in that situation, and they may be against your daughter and not the lender.

What's your daughter's financial situation? If you went to court and won, would she be able to pay? Sometimes individuals are "judgment proof," meaning you can't get blood from a stone. Do you really want to put the family through this ordeal? What are you hoping to gain? I get that you're upset, and your daughter should be making these payments, not you. A lot of parents feel this way because sometimes things don't work out the way they were supposed to, and a co-signer parent -- if that's what you are -- gets stuck making the student loan payments.

Bankrate's content, including the guidance of its advice-and-expert columns and this website, is intended only to assist you with financial decisions. The content is broad in scope and does not consider your personal financial situation. Bankrate recommends that you seek the advice of advisers who are fully aware of your individual circumstances before making any final decisions or implementing any financial strategy. Please remember that your use of this website is governed by Bankrate's Terms of Use.