# Ruined Credit and Moving Back into a Nest



## PeachyKeen (Jan 19, 2014)

My husband and I both graduated from college within the last 3-4 years.We have previously discussed our student loans and agreed that we would pay off our own loans. We're fairly young and have a toddler who we're starting a life insurance/college fund plan for. Recently, we began developing a plan to pay off all our debts (student loans and car loans, we have no credit cards). When I pulled our credit reports, I was startled to find out that my husband had way more student loans than he initially reported (he received pell grants and VA benefits in college bc he's from a lic household and his dad is a disabled veteran). In his first year of college, his mom took out more than 30 grand in private college loans, he had no idea until he looked at his credit report after graduation. He never received a refund check or any additional funds outside of workstudy. We also noticed that there were two accounts that have recently gone into collections, neither of which he had any involvement. He contacted his mother who revealed that she took out a credit card and a utility bill in his name while in college. At this point she's not financially able to pay them back and we are not either. We are a young couple, with a daughter, my husband's credit has been ruined and he has over $100,000 worth of debt due to trusting his mom to take care of his college finances. At this point I have no idea what to do. I feel like our fiscal future is in ruins and I feel horrible that I brought a child into such an awful situation. I also tanked my own credit by co-signing on his car loan because we needed a new car (well it's used) because we work in two different cities. He's afraid to prosecute his mom because he doesn't want her to go to jail and I love him, but this is enough to make me want to leave. We've cut most of our luxury expenses and even though I make a great salary, we're not able to enjoy it because of his/his mom's financial irresponsibility. I know that marriage is not supposed to be about me, but I just hate that my daughter will have to suffer from this if it doesn't get fixed. We've considered moving in with relatives to cut down on monthly rent (we'll still pay them to live there of course), but as a parent with a child I'm not sure if this is really feasible or desirable. Any advice?


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## MEM2020 (Aug 23, 2009)

Peachy,
That is a very tough situation. 

If he prosecutes his mom, how much of the debt goes away?

This is a sincere question, I'm not poking at you. If your mom had betrayed you in a similar manner, would you prosecute her?

There is no right or wrong answer to those questions. It depends on the overall context in which this fraud was perpetrated. There are cases where it might be right to prosecute, and those where it likely wouldn't be. 







PeachyKeen said:


> My husband and I both graduated from college within the last 3-4 years.We have previously discussed our student loans and agreed that we would pay off our own loans. We're fairly young and have a toddler who we're starting a life insurance/college fund plan for. Recently, we began developing a plan to pay off all our debts (student loans and car loans, we have no credit cards). When I pulled our credit reports, I was startled to find out that my husband had way more student loans than he initially reported (he received pell grants and VA benefits in college bc he's from a lic household and his dad is a disabled veteran). In his first year of college, his mom took out more than 30 grand in private college loans, he had no idea until he looked at his credit report graduation. He never received a refund check or any additional funds outside of workstudy. We also noticed that there were two accounts that have recently gone into collections, neither of which he had any involvement. He contacted his mother who revealed that she took out a credit card and a utility bill in his name while in college. At this point she's not financially able to pay them back and we are not either. We are a young couple, with a daughter, my husband's credit has been ruined and he has over $100,000 worth of debt due to trusting his mom to take care of his college finances. At this point I have no idea what to do. I feel like our fiscal future is in ruins and I feel horrible that I brought a child into such an awful situation. I also tanked my own credit by co-signing on his car loan because we needed a new car (well it's used) because we work in two different cities. He's afraid to prosecute his mom because he doesn't want her to go to jail and I love him, but this is enough to make me want to leave. We've cut most of our luxury expenses and even though I make a great salary, we're not able to enjoy it because of his/his mom's financial irresponsibility. I know that marriage is not supposed to be about me, but I just hate that my daughter will have to suffer from this if it doesn't get fixed. We've considered moving in with relatives to cut down on monthly rent (we'll still pay them to live there of course), but as a parent with a child I'm not sure if this is really feasible or desirable. Any advice?


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## PeachyKeen (Jan 19, 2014)

@MEM11363 Thanks for replying. If he reports the fraud about $2000 will go away, along with the collections accounts that are ruining his credit. I honestly considered myself in his shoes, but the reality is that I'm not in his shoes and I have no idea how I would react. The other reality is that he and I are a family unit now and we have to look out for our daughter's future. There's not much that we can do about the student loans, but if we can get rid of those collections accounts we can start to think about a home. At any rate, you're right...this is tough.


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## SunnyT (Jun 22, 2011)

Something to think about..... if you divorce, you could still stay together, but it would enable you to keep your credit (and still aim for purchasing a house) separate from his.


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## Homemaker_Numero_Uno (Jan 18, 2011)

PeachyKeen said:


> My husband and I both graduated from college within the last 3-4 years.We have previously discussed our student loans and agreed that we would pay off our own loans. We're fairly young and have a toddler who we're starting a life insurance/college fund plan for. Recently, we began developing a plan to pay off all our debts (student loans and car loans, we have no credit cards). When I pulled our credit reports, I was startled to find out that my husband had way more student loans than he initially reported (he received pell grants and VA benefits in college bc he's from a lic household and his dad is a disabled veteran). In his first year of college, his mom took out more than 30 grand in private college loans, he had no idea until he looked at his credit report after graduation. He never received a refund check or any additional funds outside of workstudy. We also noticed that there were two accounts that have recently gone into collections, neither of which he had any involvement. He contacted his mother who revealed that she took out a credit card and a utility bill in his name while in college. At this point she's not financially able to pay them back and we are not either. We are a young couple, with a daughter, my husband's credit has been ruined and he has over $100,000 worth of debt due to trusting his mom to take care of his college finances. At this point I have no idea what to do. I feel like our fiscal future is in ruins and I feel horrible that I brought a child into such an awful situation. I also tanked my own credit by co-signing on his car loan because we needed a new car (well it's used) because we work in two different cities. He's afraid to prosecute his mom because he doesn't want her to go to jail and I love him, but this is enough to make me want to leave. We've cut most of our luxury expenses and even though I make a great salary, we're not able to enjoy it because of his/his mom's financial irresponsibility. I know that marriage is not supposed to be about me, but I just hate that my daughter will have to suffer from this if it doesn't get fixed. We've considered moving in with relatives to cut down on monthly rent (we'll still pay them to live there of course), but as a parent with a child I'm not sure if this is really feasible or desirable. Any advice?


His mom won't go to jail. He does need to prosecute. She will be stuck with the debt and she can declare bankruptcy no big deal for her. She should have known better and it was criminal for her to take out these loans and utilities in his name. You guys have an added expense that's legit, an attorney. And don't start any funds for your kid's college until you've paid off your own. Really.


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## Aspydad (Oct 17, 2013)

On the positive side of things - while $100K seems like a mountain, it really is not. I assume that you and your husband are in your mid 20s and have at least 40 years to work. Also, you are going to have to learn how to live on the cheap - no restaurants, bring lunch to work, coupons, minimal clothes being purchased - and basically living on a budget. It is not impossible to work this out – you’re both college educated so you should be able to figure this out. You are going to have to figure out how to manage debt. I assume that you have 15 years at least to pay off the student loans? That’s $7K a year average equity you have to pay down plus the interest - another$ 3K a year average. Just off the top of my head $1K per month payment? Not sure of you tax bracket - but this loan is equivalent to making about $15k per year less than your total now. You guys are just going to have to adjust your standard of living to make it through this. Once you guys get on a budget and see that you can make it - the stress will get less. Hopefully one or both of you are in a profession where you can expect to get raises over the years - if you all work hard you would be surprised how much money your income will increase over the next 10 years.

The only savings you guys should do right now is 401K as long as there is an employer match - if there is none, then all extra goes towards the debt. You need to get an emergency fund going if you do not have one - even if your just putting $50 a month you need to get this going. Do you have parents who can help you figure this out? You really should get some type of help to get you guys on the right track. Really would be good if you could get to where you live on one income and use the other just to pay off debt - if you can't do that right now, that is what you both should be working towards.

On the negative here - I find it very hard to believe that your husband did not know about his student loans - banks do require the person getting the loan to sign off on it - if not in person it has to be notarized - parents cannot just take out student loans without the kid knowing about it. Now, the parents can take the money once received - but, the only money that can be loaned is what the college is charging - so your husband had to pay to the college at some point. Not like you can borrow 30K for a year of college when the college only cost $20K. If you husband had other scholarships, then the bank only loans the balance due. Sorry, something just does not add up with his story. 

Would you have married your husband if you knew he owed $100K in student loans?

Good luck to you.


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## Thundarr (Jul 4, 2012)

PeachyKeen,
I had something similar but fortunately much less costly for me. My mom charged a few thousand on a card in my name. I can only say this; your husband will never forget she did this. He'll be disappointed and confused about for the rest of his life. It's one thing to take advantage of someone else but to do it to your own child is ...(I don't have a word for it).


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## FormerSelf (Apr 21, 2013)

Your situation can be very short-term depending on how extreme you are willing to get it paid off. You really have to cut the fat and be willing to give up luxuries to get out of this mess. 

Lots of people have gotten out of your situation in a few years, but they were in 100% agreement about the budget. If you can't agree to give up on luxuries, your get-out-of-debt-plan, your monthly budget...and be 100% accountable to each other to make it happen, then this will stretch out and make it harder on the marriage...once the debt is paid off, then you can resume putting away $$$ for daughter's future...but it is pretty prudent to be logical about your priorities...and that should be: Slashing your overhead, agreeing to a budget, saving up a small emergency fund $1-2k, paying down debt...working extra hours or taking side job, and busting it until debt is gone. This may sound unconscionable, but I would also take $$ from daughter's future fund (if not overly-penalized) to pay off debt (also unless $$ was gifted by friends/family). Once you get the debt cleared in a couple years, you can restore $$ to her account EASILY.

Interesting that MIL would take out money in his name. Does she have mental health issues or from a poverty background? I don't know if she lives nearby, but a reasonable solution for her to help you out of this mess is to let you move in rent-free and be babysitter while you two can pay off debt to a manageable level. Just a wild suggestion.

I know that this scenario is not what you imagined...but it ought be accepted and then you need to be on the same page to make it happen...ESPECIALLY when it comes to the judgements from friends and family who will not understand why only cards were given at Christmas, or why you skip on eating out, or other "unreasonable" frugal decision. Have hope...it will only be brief, but you will be thankful you buckled down and stuck it out. 

If however, your resentment for you husband builds or you can't seem to agree, then marriage counseling is highly recommended.


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## Hopeful Cynic (Apr 27, 2014)

Are there other family members your husband can ask for help with this? Is his mother married? Are there siblings? He may need to warn them to watch their own credit even as he asks for help.

And yeah, I'd be on the mom to find out how she's going to remedy the situation. Free babysitting, selling off her assets, living with her rent free, etc.


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