What will happen to mother who co-signed on private SL when I declare bankruptcy?

[kellysmum]

I currently have about $18,00 in private student loan debt with Sallie Mae. My 86-year-old mother co-signed on all these loans and is currently paying them for me. My DH and I are jointly filing chapter 7. What will happen to these private loans when Sallie Mae learns of the bankruptcy? After reading posts on this forum, I am very concerned.

[justbroke]

Nothing will happen to them. You will still owe Sallie-Mae and your mother will still be the guarantor (co-signer); she will also still "owe" them. What is your specific complaint or issue with this?

[kellysmum]

justbroke,
I am concerned that Sallie Mae will come after my mother for the entire amount owed, all at once, rather than allowing her to make payments.

[justbroke]

justbroke,
I am concerned that Sallie Mae will come after my mother for the entire amount owed, all at once, rather than allowing her to make payments.

As long as it is not in default. I have student loans as well, and I pay mine through automatic deduction. The key is making sure you keep paying. Do not assume that automatic payments will continue once you file (because the automatic stay may stop that). I think the assumption that the payments are being still made, is what gets the majority of people in trouble. Additionally, many people stopped paying them before filing, so that is what's causing the real issue.

Make sure mom keeps paying. That keeps creditors happy. You'd also need to keep mom in the loop on the bankruptcy. It may take a little legwork to keep the payments going. I might suggest using a BillPay service through your bank so that the checks keep going out consistently.

[NoMoreCards]

Wow, how sad. Poor lady.

[HHM]

AS long as you keep paying, nothing will happen. If you default, they go after mom; the BK has very little to do with it.

[DirkDiggler]

I had a similar situation with 2 of my wife's private student loans through Wells Fargo that were co-signed by her mother. Her mom got notification of our filing Ch. 7 (she knew we were filing anyway). We were current on all the student loans HOWEVER, they will stop sending you notifications (I don't know about auto-pay, we never had it). Our payments varied month to month, so not getting a statement every month was a pain, but I just took the normal amount and padded the payment with $5 each month and continued to send it through my banks bill pay. Once we were discharged, we started receiving statements again and everything was fine. Good luck!

[gregemm]

As everyone else said, keep paying and it will be fine. I also have a private loan through Sallie Mae and my cosigner did not receive anything at all from them nor any collection attempts since it was being paid. It was set up automatic payments a little higher than the actual payment amount (and is currently paid ahead 2 months even)

I don't know if cosigners have a login for their site but they will cut your access off, the first way I knew when the loans were returning post discharge was when they popped back up on my credit report. (Mid-BK the accounts were marked as closed. They came back as deferred until March from just after discharge to when payments resumed) I did send them a letter shortly after to find out when they were starting again, and the payment amounts, as it seemed like it took a really long time for them to start back up and I didn't want to wait two months and find out it was now behind.. Everything with it is as if the bankruptcy had never happened.

[ValleYum]

I currently have about $18,00 in private student loan debt with Sallie Mae. My 86-year-old mother co-signed on all these loans and is currently paying them for me. My DH and I are jointly filing chapter 7. What will happen to these private loans when Sallie Mae learns of the bankruptcy? After reading posts on this forum, I am very concerned.

I live in Ohio and it is considered an executory contract. I am concerned that the trustee, when looking at our monthly expenditures, will force us to surrender it. My mother pays the $111.00 per month directly to Rent A Center for us.

My husband and I are filing jointly ch. 7-probably papers will be filed by the end of January. I have a J.C. Penney credit card with G.E. Retail Bank with approximately $7,000 in charges. I know this sounds terrible, but my mother always paid this card-has for years and years. There's no way my DH and I could afford the $400 a month payments. I just figured she would go on paying it as she always did. Back in October, I charged over $1000 to this account for clothing, household goods, a hairdryer, and a straightening iron, figuring my mother would pay the bill when it came in November. The last time I used the card was the first week of November for $16.00.

Problem is, my mother fell on hard economic times and couldn't pay even the minimum. I did not charge the items with the intent to declare bankruptcy; I honestly figured my mother would pay as she always had. So now we're taking our paperwork to our attorney's secretary on Tuesday to go over so she can type up the forms that will be filed with the bankruptcy court. The attorney said G.E. Retail Bank would not be concerned about the $1,000. I'm worried about the appearance of fraud or the appearance of intent to commit fraud. Can anyone please advise? Thanks.

kellysmum:

I have read your posts over the past week or so and I have gone back and forth as to ask the following question of you:

If your mother is paying your bills currently - what relief is bankruptcy going to offer you?

Reading the quotes from you that I posted above, it looks like your mom pays a lot of your bills for you so you won't even benefit in a BK by saving those amounts (and of course your student loans aren't typically dischargeable). If you don't get a financial gain from filing (like no longer having to pay payments that YOU are currently making), filing a BK 7 is not going to help you.

It sounds like your financial issues are a matter of not enough income and bankruptcy just doesn't help that. I mean this in the kindest of ways. It is not meant as an attack on you at all.

Bankruptcy is a powerful tool - I hate to see you use it when it doesn't help you particularly since a lot of your debt seems to have been medical and a catastrophic medical event could happen the day after you file and what would you do then?

Signed: A worried for you, Valle

[NoMoreCards]

Very well stated. My thoughts exactly, I just couldn't think of a non-rude way to phrase it.

[HHM]

I wouldn't go so far as to say BK wont help. There really is more to the relief bankruptcy provides than just financial.

Sometimes BK is the kick start to improvement in all areas of life because BK relieves a good portion of the financial and emotional stress.

[ValleYum]

I wouldn't go so far as to say BK wont help. There really is more to the relief bankruptcy provides than just financial.

Sometimes BK is the kick start to improvement in all areas of life because BK relieves a good portion of the financial and emotional stress.

I guess I would want to see a bigger bang for my buck, HHM. Like the "relief" from hundreds of dollars per month in payments that *I* no longer had to make.

Kellysmum also posted she had just had a bad medical test and I personally couldn't imagine using my bankruptcy if I was facing the possibility of huge medical bills without darn good medical insurance ( which from prior posts it does not seem that she has).

Maybe it will give her a jump start to better finances - but this being her 3rd attempt makes that hope a little less probable if there isn't income to pay for the basics after she files.

Truly, this is one of the times I hope I am wrong.

[Pandora]

I agree with Vale...

However -to the OP:

filing BK would give your mother great relief to be free of having to pay your bills. I couldnt even imagine doing that to my mom - the stress it must cause her is unimaginable, especially since OP stated her own mother is in financial hard times. You should be on your knees thanking your mother for all she's done thus far as from the postings above, it reads like you took advantage of her (i.e., "I just assumed she would pay it as she's always done...")

Sorry..call it as I see it... and while it may seem harsh.... perhaps if the OP had worded things differently....views would be different.

[bcohen]

Hey, sometimes you've got to call a spade a spade. I know that I would be embarrassed to ask my family for help, and I certainly wouldn't even THINK of having them pay my bills on a regular basis. And I am very poor, and really struggling!