Student Loan Debt in Bankruptcy

• As a cosigner, you are responsible for paying the student loan. According to section 521 of the Bankruptcy Code, all debts must be included in the bankruptcy. Therefore, you need to disclose the student loan as a debt in the bankruptcy petition. State the name of the student loan lender, the lender's address, the last four digits of the account number and the total amount of the outstanding debt. If the loan already transferred to a collection agency, provide their information in the bankruptcy as well.
  
  

Student Loan Proof of Claim

• Speak with the primary borrower to let him know you intend to file for bankruptcy. Find out if he will keep paying the student loan. The student loan lender will pursue you for payment if the primary borrower cannot continue payments. When the lender receives notification of the bankruptcy case, it will file a proof of claim with the bankruptcy court verifying that you are a cosigner of the loan. If the bankruptcy case requires setting up a payment plan for your debts, the lender can request the student loan be part of the payment plan.
  
  

Discharge Status of Student Loans

• Student loans are eligible for discharge due to an undue hardship. The bankruptcy court can discharge the student loan if paying the loan makes it difficult to maintain a minimal standard of living for you and your family. You must have demonstrated good faith efforts to pay the loan. An inability to pay the loan must exist during most of the repayment period. If the bankruptcy judge discharges the student loan, payment of the student loan cannot be enforced against you.
  
  

Obligation to Pay Debt

• The lender has the right to continue collection attempts if the courts did not discharge the student loan in the bankruptcy. You remain responsible for the debt until the student loan is either paid off or the lender agrees to release you as a cosigner of the loan. Speak with the lender to find out the terms of getting a cosigner release. If you meet the conditions for a cosigner release, your obligation to make any further payments will be relinquished.