I cosigned my ex-wife’s student loans while we were married. In our divorce decree, the judge ordered my ex-wife to pay her student loans. But she refuses to make payments. Now the lender is coming after me to collect the debt. Will filing for bankruptcy help me? If not, is there anything else that I can do?
If you cosigned your ex-wife’s student loans, the lender can come after you to collect the debt even if your divorce decree requires her to pay the obligation. But there are things you can do if your ex-wife doesn’t pay her student loans. Read on to learn more about your options and whether filing for bankruptcy can help you.
For more information on whether bankruptcy is in your best interest, see our topic area on Should I File for Bankruptcy?
Talk to Your Ex
Just because the judge ordered your ex-wife to pay the student loans in your divorce decree doesn’t mean that you are no longer liable for the debt. Your divorce decree doesn’t affect your contractual obligations to the student loan company. But it does provide you additional remedies if she violates the court’s orders.
If your ex doesn’t pay the student loans you cosigned, it can affect both her credit as well as yours. If she fails to make the payments, consider talking to her to see if you can work out a solution. If she refuses, explain to her that there may be serious consequences for willfully violating the court’s orders in your divorce decree.
Ask the Lender to Release You
If your ex has private student loans, some lenders might agree to release you from your obligations as a cosigner if you satisfy certain conditions. Unfortunately, in most cases, your ex-wife must have a history of making timely payments and agree to provide the lender with financial information to prove that she can handle the payments on her own. (Which doesn't sound likely in your situation.)
If your ex refuses to pay the student loans, the lender may not agree to release you. But each private student loan company has its own rules regarding cosigner releases. It doesn't hurt to contact the lender to learn about your options.
Enforce the Divorce Decree in Court
If your ex violates your divorce decree by refusing to make payments on the student loans, you can seek damages in court. In most cases, you will need to petition the court and show that your ex is willfully violating the divorce decree.
Depending on the severity of the violation, the court can sanction or penalize your ex. If you had to pay the student loans because your ex refused to do so or suffered other damages, you will typically be entitled to reimbursement or compensation.
Will Filing for Bankruptcy Help?
If the lender is coming after you to collect the student loans you cosigned, filing for bankruptcy can stop or delay the creditor’s collection activities. But keep in mind that student loans are typically not dischargeable in bankruptcy.
If you want to wipe out a student loan obligation in bankruptcy, you must show that paying the loan will be an undue hardship on you. In general, it’s very difficult to prove undue hardship in bankruptcy court. But some courts are becoming more lenient in their requirements and allowing more debtors to discharge student loan debts. If you are thinking about filing for bankruptcy to eliminate your student loans, talk to a knowledgeable bankruptcy attorney in your area to learn the requirements in your jurisdiction.
Even if you can’t discharge your liability for your ex-wife’s student loans, filing for Chapter 13 bankruptcy can provide some relief. When you file for bankruptcy, the automatic stay prohibits most creditors (including student loan companies) from trying to collect their debts. Because most Chapter 13 bankruptcies last three to five years, this can provide you more time to work something out with your ex or the lender. (For more information on how Chapter 13 bankruptcies work, see our Chapter 13 Bankruptcy topic area.)
To learn more about how student loans are treated in bankruptcy, see our Student Loans and Bankruptcy topic.