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Posted by Shyster1040 on January 27, 2007, 12:11 am
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The law of sureties and guarantors has long given particular
protection to persons who guarantee the debts of another,
particularly when the guarantor does so without adequate
compensation for the risk taken (i.e., the guarantor is not
acting as an insurer).
The basic rule is that the guarantor is only on the hook for
the debt that he agreed to, not for whatever subsequent
debts the creditor and the primary debtor might cook up
later on. In addition, the rules are designed to prevent
the creditor and the primary debtor from colluding against
the guarantor, e.g., by the creditor excusing repayment by
the primary debtor and, effectively, turning the guarantor
into the primary debtor and an unwilling donor who made a
gift of the borrowed funds to the erswhile primary debtor.
The specific details of the law will vary from state to
state, but generally the courts have given great protection
to guarantors and have viewed any significant modification
of a debt as excusing the guarantor, regardless of whether
the modification decreased or increased the risk of the
guarantor. Without doing a 50-state survey, I would hazard
a guess that at least a few courts have refused to excuse a
guarantor where the modification benefitted rather than
harmed the guarantor.
Thus, any action on the part of the creditor or the debtor
that is inconsistent with the terms of the deal that the
guarantor initially agreed to will generally relieve the
guarantor of his obligations unless the guarantor agrees to
the change in terms.
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Posted by Dennis on January 23, 2007, 2:42 am
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"Stuart A. Bronstein" wrote:
> A discharged debt can be reaffirmed under bankruptcy law,
> which revives the legal obligation to pay.
Actually, his obligation on this loan was not discharged by
his bankruptcy, and to my knowledge would not have been even
if I had not co-signed it. The way I understand it, you
can't d/c *any* student loan by bankruptcy action.
Even though the instruction booklet is somewhat ambiguous as
to whether or not I can take the deduction, TurboTax
*clearly* says "the loan must be (or have been) for your own
education" (quoted as closely as I can from memory).
> since the parent is probably in a higher tax bracket than the child,
I am fully retired and live on my military retirement pay;
he actually makes more than I do now.
Again, thanks **very much** to all who took time out of
their day to help. :-)
Dennis
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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Posted by Stuart A. Bronstein on January 24, 2007, 2:34 am
Please log in for more thread options >> A discharged debt can be reaffirmed under bankruptcy law,
>> which revives the legal obligation to pay.
> Actually, his obligation on this loan was not discharged by
> his bankruptcy, and to my knowledge would not have been even
> if I had not co-signed it. The way I understand it, you
> can't d/c *any* student loan by bankruptcy action.
I haven't researched this recently, but my understanding is
that it is difficult but not impossible to discharge some
student loans.
> Even though the instruction booklet is somewhat ambiguous as
> to whether or not I can take the deduction, TurboTax
> *clearly* says "the loan must be (or have been) for your own
> education" (quoted as closely as I can from memory).
That's true of deducting interest on student loans. But as
for qualifying tuition and related expenses, the deduction
can be made for the education of the taxpayer, spouse or a
dependent.
Stu
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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Posted by Shyster1040 on January 24, 2007, 2:34 am
Please log in for more thread options > Even though the instruction booklet is somewhat ambiguous as
> to whether or not I can take the deduction, TurboTax
> *clearly* says "the loan must be (or have been) for your own
> education" (quoted as closely as I can from memory).
If that is what TurboTax says, then TurboTax is wrong.
According to the statute, if you became legally responsible
for payment on a student loan for your child where the loan
itself and your obligation were incurred when your child was
a "dependent" of yours, and you pay interest on that loan,
then you can deduct that interest for the year in which paid
(provided that the other requirements for deductibility are
satisfied). As such, the statute clearly contemplates
parents incurring student loan debts on behalf of their
dependent children, and provides the parents a deduction for
any interest they pay on those loans.
Furthermore, the requirement that the child be your
"dependent" only applies at the time that the debt is
incurred by you - i.e., when you signed as cosigner when the
loan was originally taken out. The fact that a child may no
longer be a "dependent" at the time the parent makes an
interest payment on the loan is irrelevant to whether that
interest is deductible by the parent; all that matters is
that the child have been a "dependent" when the loan (and
the parent's legal obligation to pay) was incurred, and that
the parent have a legal obligation to pay the interest.
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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