Attorney Q & A with Eric Brown
Today we received a question via our website pertaining to a Parent PLUS student loan. Attorney Eric Brown took the time to answer the question asked.
“My child signed my name to a Parent PLUS Loan and I thought I was just a co-signer of “her” loan. Do I have to pay it?”
“I am a widow and have been since the children were young. My husband died of a massive heart attack due to PSTD caused by surviving the WTC 9/11 attacks. I have had to work 4 jobs and did the very best I could. When I sent my daughter away to school, I thought I was allowing her to sign my name to a student loan that was in her name. I had no idea it was “MY LOAN!” She ended up dropping out of school with 20 credits to go. I cannot afford to pay the 1000.00 a month on my 43000.00 a year salary and pay my mortgage or save for the future. I have almost blown through what little savings I had and my daughter ran off 4 months ago and she will not have any contact with me about this matter. I would like to start a class action suit against the government because this is not right. I paid my way through school and my loans. What are my options? I have worked so hard to get where I am and I am tired…Do I really have to work more jobs to pay back this loan? It’s not fair what this government is doing to us.”
“Let me start by saying that I am sorry that you are having problems, especially with one of your kids and money. I hate to see any family in crisis for any reason. With that said, let’s get to your question. This experience is introducing you to a legal concept called Joint and Several Liability. This means that if someone “co-signs” on a loan with someone else, the common misconception is that one person is “primary” on the loan and the other person in some way secondary. This is not true. Joint and Several Liability means that both are equally responsible for the debt. This means that irrespective of the loan being to the benefit of one of the people, both are on the hook. The creditor can collect from both, or just choose one to go after that they perceive has the deeper pockets. You should really speak to an attorney in your area to explain further but that is the basis of the concept.”
If parties have joint liability, then they are each liable up to the full amount of the relevant obligation. So if a married couple takes a loan from a bank, the loan agreement will normally provide that they are to be “jointly liable” for the full amount. If one party dies, disappears or is declared bankrupt, the other remains fully liable. Accordingly, the bank may sue all living co-promisors for the full amount. However, in suing, the creditor has only one cause of action; i.e., the creditor can sue for each debt only once. If for example, there are three partners, and the creditor sues all of them for the outstanding loan amount and one of them pays the liability, the creditor cannot recover further amounts from the partners who did not contribute to the liability.
The converse is several or proportionate liability, where the parties are liable for only their respective obligations. A common example of several liability is in syndicated loan agreements, which will normally provide that each bank is severally liable for its own part of the loan. If one bank fails to advance its agreed part of the loan to the borrower, then the borrower can sue only that bank, and the other banks in the syndicate have no liability.
Joint and Several Liability
Under joint and several liability or all sums, a claimant may pursue an obligation against any one party as if they were jointly liable and it becomes the responsibility of the defendants to sort out their respective proportions of liability and payment. This means that if the claimant pursues one defendant and receives payment, that defendant must then pursue the other obligors for a contribution to their share of the liability.
Joint and several liability remain most relevant in tort claims, whereby a plaintiff may recover all the damages from any of the defendants regardless of their individual share of the liability. The rule is often applied in negligence cases, though it is sometimes invoked in other areas of law.
In the United States, 46 of the 50 states have a rule of joint and several liability, although, in response to “tort reform” efforts, some have limited the applicability of the rule. About two dozen have reformed the rule, with several (Alaska, Arizona, Kansas, Utah, Vermont, Oklahoma, and Wyoming) abolishing. In some instances, it is abolished except where the defendants “act in concert”.
Many partnership agreements have joint and several liability clauses, meaning that all the partners are responsible for the debts of the partnership. If one partner becomes insolvent, for example, the other partners become responsible for that person’s share of the partnership’s debts.
Having been preparing bankruptcy cases for the last 5 years, Eric has filed more than five hundred Chapter 7 cases to date. He enjoys the practice of bankruptcy because it allows him to truly help people at the time of their greatest financial need. His bankruptcy practice focuses on individual consumers with personal debt as well as small businesses needing to liquidate.
Eric also has a robust Social Security Disability practice where he has represented clients in close to one hundred Social Security hearings since he began practicing Social Security law. He has helped Social Security claimants get benefits who have both physical and mental disabilities. He enjoys this practice because it allows him to help those whose circumstances have rendered them unable to work. He is an advocate for those who have spent their whole working lives paying into an insurance system (our Social Security Disability system) that has now denied them the benefit of that insurance at the time of their greatest need.
Eric also works with Personal Injury clients that have been injured, due to no fault of their own, and he helps them get the treatment and compensation they need and deserve.