My wife co-signed on a loan for an ex-boyfriend five years ago when they were together, before we even met. Now a collection agency is after her. Our attorney has recommended we take Chapter 7 bankruptcy, but the debt is only $5,000. Is there a better way?
You bet there’s a better way! It’s just plain stupid to even consider trashing your financial life over $5,000, because bankruptcy stays on your record for years.
This is an old loan with very low expectations for collection. The collector probably bought it for next to nothing, and everything he gets will be profit. It’s not uncommon for debts this old to be settled for fifty cents on the dollar, and sometimes even less. Haggle with them, and I’ll bet you can talk them down to $2,500.
Get an agreement in writing before you send them a dime, and do not give them access to your bank account. They’ll threaten to sue, or ruin your credit and that kind of stuff, but my guess is you can work this out. It may take a couple of weeks and some patience, but that’s nothing if it will save you $2,000 to $3,000.
You guys will have to pay some Stupid Tax on this one, but I hope it will teach you both a very valuable lesson. Never co-sign a loan!
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