YNAB You Need A Budget

[PhatMatt3000]

Hello all. My wife has a Parent Plus loan through AES. Her father's name is on the loan with the total balance being $49,789. My wife's share of that balance is $36,837 ($483.20/month), the rest belonging to her brother who attended another institution. Here's our dilemma: we are behind approximately $1500 in payments on our share of the loans because of several months of unemployment. We have been employed for about two years now, and out of desperation I purchased YNAB and have been attempting to budget for this (and the rest of our life) but I have come to the difficult realization that there is NOTHING extra in our budget to pay off the past-due amount. Additionally, her brother hasn't been making payments period. Consequently, her father receives daily collection calls and has even been called at work about the past due balance, then calls and yells at us but there's nothing we can do to catch up on our balances and meanwhile her brother still doesn't pay on his loans.

That said, I need to find a way to get our loans out from under her father's name and separated from what her brother owes so that we don't have to involve anybody but ourselves in dealing with these loans. Furthermore, we have already used up all forbearance on the loan and they won't allow us to "reset" the balance to we can start fresh, nor will they discuss ANY of the loan details with anybody but her father, who is difficult to deal with in this particular situation. It feels as if our hands are tied no matter what we do, and all we want is a fresh start so we can stay ahead.

Is there anything I can do to sort this mess out? Any and all help will be greatly appreciated.

[jessiebird]

Tough situation.

The only thing I can think is that it's in her father's best interest to talk to AES about the situation, if he wants to stop getting collection calls these loans. But if he cosigned the loans then this is the deal, I guess; I can't really see them taking his name off them as the agreement is that if the primary borrowers don't pay, it falls to him. And if he is the only borrower on the loan, then same thing: He took on the risk that he would have to make the payments if she and her brother couldn't.

In his (possible) defense: Is there anything in your lifestyle that might make her father question whether you truly can't pay anything on these loans? If you're driving cars that you owe money on, or not taking on a part-time job that could help or something, maybe it's bothering her father that you two have made choices that he feels leave him holding the bag. (Just a suggestion; forgive me if I'm way off base.)

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[MRKlink]

First of all, I am sorry that you are in this situation. It's never a fun thing when debt and family members are involved.

I am not familiar with Parent Plus loans, but I looked up some information. It sounds like the loans are in the parent's name ONLY. As awful as this sounds, it is technically (per the paperwork HE signed) his responsibility to make sure the loan is paid. "Parent PLUS loans are the financial responsibility of the parents, not the student. If the student agrees to make payments on the PLUS loan, but fails to make the payments on time, the parents will be held responsible." (I found this on finaid.com). This is also why AES won't talk to anyone but him. Banks have a general policy not to talk to anyone but the account holder.

Does her father understand that this loan can never actually affect anyone but him? (It is going to affect how he then treats you though, I'm sure). He is and is always going to be the one with the collection calls, delinquencies on his credit, etc. The bank is also not going to consider helping him out more if his income/debt level shows that he should be able to make the payments on this loan. The only way for you to get any of it out of his name would be to finance a completely new loan in your names for the amount of your wife's share and use the money to pay his loan off. However, that is a pretty large amount, and if your income, credit or assets (like home equity) are not enough to qualify for a loan of that amount, then you won't be able to ever get it into your names. If both your wife's and her brother's loans are consolidated into one, it will also be hard to get a true payoff value to know that you're paying off ALL of her part (interest/fees/whatever else).

If you can't get a loan to pay off your part, is there a way that, if you showed her father that you are budgeting (print out your budget and show it to him!), being responsible with your money, and you are still making monthly payments (although behind), maybe he'd be willing to loan you the $1500 to get back up to date on your part? You could make an arrangement to pay him $20/month for a little over 6 years (or whatever you can afford for however long it will take), to show that you're making an effort to pay this, but you really don't have the money to get back up to date with the bank. I don't know what his financial situation is like, or his willingness to help, but it might be worth a try. You will probably want to be prepared with a history of exactly what you have paid so far and when, so that he knows you're working at it (and probably the majority of the reason for the collection calls is the brother's share, not yours).