Spouse liability????

[housewife]

What is the name of your state? Virginia
I am a stay at home mom raising 3 kids under age 4. I have no income. House and car are in my husband's name alone. We do have a joint checking account and payments to my creditors have been made from this account in the past. I have a defaulted student loan (from before we were married). We live in Virginia which is not a community property state. If I am sued by the student loan holder, can they go after my husband's assets even though he is not responsible for the loan itself. In other words, can they get at him through the judgment since they can't get at him otherwise?
Thanks for any help - housewife

 

[Ladynred]

If I am sued by the student loan holder, can they go after my husband's assets even though he is not responsible for the loan itself.

No, they can not. However, if your name is on any bank accounts, they WILL sieze all the funds in the account(s) and your husband will have to fight like hell to get HIS money back. If you think a garnishment is looming, get your name OFF the accounts. There are ways for you to use the account w/o actually having your name ON the account. If this is a federally backed student loan, they will not have to sue you to get the money either.

 

[housewife]

spouse liability

Thanks ladynred - I figured as much about the bank account and am going to take my name off. It is indeed a federal student loan but I have a collection agency calling me, not the student loan agency so I'm just not sure what to expect next. They can't sue my husband for any reason can they? Thanks!

 

[housewife]

Ladynred- I forgot to ask you - you mentioned that there are ways to use the account even when my name isn't on it. Do you just mean I could have the debit card and use the pin for purchases or cash withdrawals or are there other ways as well? Thanks!

 

[emilye]

just some info from someone who used to process student loan defaults and appeals claims...

you are and will be responsible for those student loans forever, until they are paid. They will NOT come off your credit in 7 years, they cannot be forgiven by a bankruptcy. The DOE (Department of Education) and guaranty agencies are usually not aggressive about collections, but you will have this debt UNTIL you pay it.

If you call the servicer of your loan, they can provide you with differing payment options, some based on income, and/or you may qualify for a deferrment or forbearance. Deferrments are harder to get, but you may qualify for something like unemployment or economic hardship... worth a try.

Forbearances can usually be granted on the phone if you are willing to agree that you do intend to repay the loan. (Difference between deferrment and forbearance is who pays the interest, you or federal government, and when payments are due).

Contrary to popular belief, a forbearance does not negatively affect your credit. Most forbearances are for one year, and any unpaid interest will cap at the end of that year and be added to the principal balance.

Getting a forbearance is better than allowing these loans to go further into default. Once the claims process has begun, that's it. It will be on your credit background forever. Lenders look particularly unfavorably on defaulted student loans, just to let you know.

Really, try to clear it up if you can. It is worth it to make a few calls, some servicers have websites you can download deferrment and forbearance forms from. Trust me, these loans will not go away. So get some advice from your loan servicer while you still can. IF you are having trouble finding out who your servicer is, try this link to the fafsa site. Or call your school's financial aid office and see if they can provide you with the info.

http://www.fafsa.com/servicers.htm

Good luck with this. Really get this taken care of.

 

[emilye]

forgot to address this

As I was a claims processor and not a collector (default claims happen after due diligence/collections attempts), I cannot say what tactics a collector can use. I got these files after the loans had been unpaid for 270 days, and all collection activity had happened. In my 3 years at this job, I have never seen a case where a collection agency was able to access a bank account.

The only person responsible for the loan is the person who signed the promissory note, and that would be you as you are the student. Your spouse is not financially responsible for this debt.

Whether a collector could try to attach his money with yours, I don't know, but it isn't legal as far as DOE guidelines. You signed the promissory note, not your husband, so you and you alone are liable. With that said, it would be wise to separate any accounts you have jointly until you get this cleared up.

And once you get the process started for deferrment/forbearance/repayment plan, you will no longer have the collectors on your back. And you can start repairing your credit.