Dear Debt Adviser,
My girlfriend needed a student loan to stay in graduate school. The problem: She forged my name and Social Security number on a loan application for $19,000. It now shows up on my credit report. Without her knowing, I contacted the lender and obtained a copy of the forged document. What should I do? I’ve heard that contacting the financial institution and reporting this could result in her being arrested. Is this correct? My parents have encouraged me to do this, saying it is better for this to happen than to have my credit ruined for life. I love her but as a result of this cannot consider her eligible for marriage. Please advise me.
— Tom

Dear Tom,
You’re a better man than I am, Tom. That you can separate your love from the practicalities of sharing your life with her and her actions is a rare gift. I think you are asking the right questions, but I want to make sure you are protected going forward. My experience with legal remedies is that they are rarely satisfactory and almost always messier than anyone expects. So I have some legal — and some nonlegal — advice for you to consider.

You’re right that forging your name, making you financially responsible for the loan, is fraud. I am presuming she forged your name as a co-signer, not the primary borrower. But that doesn’t matter. Once the fraud is out in the open, the financial institution could well decide to pursue criminal charges against your girlfriend. This could be especially bad for your girlfriend if the fraudulent loan was granted using federal money from the U.S. Department of Education.

But you are also at peril. Once you know about the fraud and do nothing, you are on the hook at least financially, and possibly criminally.

You state that you still have feelings for her. And you seem hesitant to take the necessary legal action to remove your name from the loan by reporting the fraud. So let’s briefly discuss alternatives.

All of your alternatives begin with a heart-to-heart talk with the felonious female. What options are viable will depend in large part on her reaction to being found out. If she regrets what she did and is willing to do what it takes to set things right, that’s all to the good.

However, that may not be what unfolds. Maybe she sees nothing wrong with what she did. She could claim you signed the documents during a lost weekend in Las Vegas. And she could even blame you for trying to upset her education plans by ratting her out.

I see three alternatives for resolving this mess. One, get your name off the loan immediately. Two, have her pay off the loan very quickly. Third, blow the whistle.

Because of your liability, she has to get your name off the loan fast. She can do this several ways. She can consolidate the loan with other student loans, or another lender, using a new co-signer — one who is aware that they’re co-signing. She could borrow the money from family, if that’s possible. Or she can get a job with the goal of paying off the debt in a year or less.

If you go for the work-and-pay option, consider having her sign an affidavit acknowledging her actions, just in case she later claims you knowingly co-signed. I wouldn’t go any longer than a year for any repayment plan because of the risk to you if she defaults or dies. That’s right: If a piano falls on her or she otherwise checks out before the loan is paid off, it’s yours to pay.

Claiming that the loan was a fraud when you had knowledge of the fraud may make you liable for the fraudulent debt. If she doesn’t accept responsibility, then I suggest you have a chat with an attorney and then contact the lender to be taken off the loan.

Whatever you do, it won’t be the end of the world. She’ll learn a valuable, though costly, lesson that may serve her well in the future.

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