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FUNERALS OF LOVED ONES MAY ALSO BE A TIME TO MOURN STUDENT LOAN DEFAULT

Charleston 6/08/2015 01:55 PM GMT (TransWorldNews)

Many borrowers of student loans are in for a shock if something terrible happens to their co-signer. Typically, co-signers of student loans are the borrower’s parents or grandparents. It is not uncommon for lenders, especially private lenders, to require a co-signer for a young borrower. This is because young borrowers usually have little to no prior existing credit history and no assets that can be held as collateral in the event the young borrower defaults. Attaching a co-signer to the loan is the lender’s method of insurance. If the young borrower does not make the monthly student loan payments, the lender may go after the co-signer to collect on the outstanding debt.

What most borrowers and co-signers are unaware of are tiny clauses hidden within the fine print of their contracts that refer to “auto-default.” Auto-default, depending on the way the contract is written, can mean that if a co-signer dies the student loan automatically goes into default. Auto-default may also occur if the co-signer declares bankruptcy. This may occur even if the young borrower has timely made all of his or her monthly student loan payments. One of the reasons the lenders want to employ auto-default clauses is that the lenders’ risks substantially increase once the co-signer is no longer available to accept liability on behalf of the young borrowers. Upon auto-default, the entire balance of the debt becomes due on demand. Obviously, this can wreak havoc on young borrowers. When auto-default occurs, borrowers can have their credit scores permanently marred even though they paid every payment they were required to make in full and on time.

Auto-default situations are quite unfortunate for the borrower because it often penalizes borrowers through no fault of their own. Borrowers cannot control the life and death of their parents and grandparents or their ability to declare bankruptcy. Auto-default is extremely unfair when the borrower has a proven track record of successfully making all monthly payments on time. Student Loan Law Group warns borrowers to read over their student loan contracts and determine whether the contracts contain an auto-default clause.

Student Loan Law Group wants all borrowers and co-signers to be fully informed of their rights when it comes to their student loans. All lenders must comply with the Fair Debt Collection Practices Act at all times. Student Loan Law Group’s attorneys can ascertain whether a loan servicer has violated the Fair Debt Collection Practices Act. Certain violations may result in the borrower collecting a fee from the loan servicer for the violation of his or her rights as well as collecting reimbursement of attorneys’ fees. Borrowers or co-signers who have questions regarding their student loan contracts or who may be facing default are encouraged to contact Student Loan Law Group today. Borrowers or co-signers who feel that they may have been subjected to unfair collection practices or harassment at the hands of their loan servicer are also encouraged to contact Student Loan Law Group immediately to determine their options. Student Loan Law Group is available to help and may be reached directly at 888-843-1706.  

info@studentloanlawgroup.com
studentloanlawgroup.com/default-student-loans/

 

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