Student Loan taken out on behalf of someone else

[nchazan]

What is the name of your state (only U.S. law)? New Jersey

Appx 5 years ago I (naively) agreed to take out a $40,000 student loan while still in school, but then lend that money to my then boss and close family friend. Why? Because I had very close ties to his family and he was expanding the business, giving me a great salary, and things were looking great. 4 years later, I quit the business and now have a very large sum of debt under my name. While he has made consistent payments, lately he has been paying 15,30,45 days late and hurting my credit. I need to get him to take out a loan of his own to pay this sum back ASAP, but he claims he doesn't have the credit or means to do so at the moment. I don't plan on waiting.

I'm semi smart : I had a family-friend/lawyer draft a contract with the following:

"I, ______ agree to loan _____ personally the sum of $40,000 which is repayable at a rate of $557.26 per month until the total sum of $40,000 plus interest accruing at the prime rate plus 6% is paid off in its entirety.

In the event of default in the form of non-payment or habitual late payment, the terms of which shall be determined at my sole discretion, the entire remaining principle balance along with any accrued interest shall become due and payable immediately upon demand."

What are my options? I do have a copy of the check i wrote out to the company, and also copies of the check given to me from the bank who originated the student loan.

[ecmst12]

Hire a lawyer and sue. The amount is too much for small claims.

[CraigFL]

The previous advice is correct but as an answer to your questions, it will be difficult to get a loan agreement/promissory note signed after the fact, especially if he is already having problems with paying. To maintain your credit rating, it would be better for you to make the payments and have him give the money to you while you get this sorted out.

[JETX]

[quote=nchazan;2293776]I had a family-friend/lawyer draft a contract with the following:

"I, ______ agree to loan _____ personally the sum of $40,000 which is repayable at a rate of $557.26 per month until the total sum of $40,000 plus interest accruing at the prime rate plus 6% is paid off in its entirety.

In the event of default in the form of non-payment or habitual late payment, the terms of which shall be determined at my sole discretion, the entire remaining principle balance along with any accrued interest shall become due and payable immediately upon demand."[/qutoe]
First, your post is not clear as to whether this agreement was actually accepted and SIGNED by the other party. Was it??
Second, the 'attorney' who drafted that document got his JD out of a cracker jack box. There are so many holes in that it will likely NEVER hold up in court. For example, the interest statement is NOT specific to what date the interest rate is set. Another, the 'terms at your sole discretion' is not a legally binding clause. There are other 'concerns', that a REAL attorney would have taken care of.

What are my options?

Again, depends on the REAL facts. The SOL (Statute of Limitations) for a debt in New Jersey (written or oral) is 6 years. Your post says you are now in the 5th year. Simply, that means you have LESS than 12 months to demand payment, get denied, and file a lawsuit. Better get moving!!

I do have a copy of the check i wrote out to the company, and also copies of the check given to me from the bank who originated the student loan.

Good. Keep copies of ALL correspondence... for when you have to go to court.
Oh, and you should start talking with REAL attorney's in your area NOW... since you will need one to proceed with litigation.

[nchazan]

The above "contract" was indeed signed by him BEFORE the fact, not after. sorry for the misclarification. I'm worried on how to approach him with this, as he could stop paying COMPLETELY and leave me in the dumps if he feels I'm now turning my back on him. What would a lawyer roughly charge to pursue such a thing in court?

[ecmst12]

There is no way we could tell you that. You should consult a few before hiring one...but don't take too long! I wouldn't contact him at all until you have a lawyer, and then the lawyer will handle the contact.

[nchazan]

yeah, stupid question. What type of lawyer should i look for, meaning specialized in what field (for maximum knowledge in this field) ? thanks for all your responses by the way, you've all been a great help

[nchazan]

I just realized the date the check was written to him was 10/26/2005 so we are not quite yet at 4 years. I am wondering if I should give him an ultimatum for refinancing within, say ilke 3 months and THEN pursue legal action. Or not**************tough question