Co-signer filed a chapter 13

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I have loans from Sallie Mae in a large amount, both federal and private (200k +). My parents co-signed these loans and I was making payments on a partial payment plan in a timely fashion.

Are you paying on the private or federal?Your parents did not cosign for the federal. Which loans are you paying on?

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Due to issues, my parents recently filed for a Chapter 13. I knew about this, but the fact that they co-signed for my loans escaped our minds.

They cosigned because your credit would not let you borrow by yourself.
Now, Sallie Mae is aware of this and has put a hold on most of my loans as they are in bankruptcy status - I am only able to repay a few.

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Since I am the primary account holder with Sallie Mae and since I am NOT filing for bankruptcy, how does this affect my credit rating and/or how does this have a detrimental effect on me? Speaking to Sallie Mae, they suggest that I try to release the co-signer, but this can only be done after the Chapter 13 has been taken care of.

Botttom line...you will not get a cosignor release especially after bankruptcy. Cosignor release happens after making 24 on time payments immediately after going into repyament. If you are in partial payment, you wont qualify. Once the bankruptcy has been discharged, the loan WILL default.....you both need to be aware of this. I dont care what they tell you now....it will happen. The general customer service reps do not know or understand the complications of bankruptcy. Will the bankruptcy stay, they should not be talking to you at all. Your payments should be going to a lockbox.


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Am I in trouble as far my credit or my future goes? Or will I be okay since I am not the one filing? I am young and don't want the hassles of bad credit to linger with me for the rest of my life. Am I screwed or not?

It is going to affect you worse 3-5 years down the line. I hope with your 200k loans there is an MD or JD after your name. You are going to need this.

Your federal loans...if you have not consolidated them yet with the Direct Loan Program....get it done now!!!

Thank you for the reply.

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Are you paying on the private or federal?Your parents did not cosign for the federal. Which loans are you paying on?

Before the bankruptcy, the private loans were in deferment, while I was paying the federal loans via income based repayment plan. Now they are saying that the majority of my loans are frozen, but I still have to make payments on a few which are not.

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Botttom line...you will not get a cosignor release especially after bankruptcy. Cosignor release happens after making 24 on time payments immediately after going into repyament. If you are in partial payment, you wont qualify. Once the bankruptcy has been discharged, the loan WILL default.....you both need to be aware of this. I dont care what they tell you now....it will happen. The general customer service reps do not know or understand the complications of bankruptcy. Will the bankruptcy stay, they should not be talking to you at all. Your payments should be going to a lockbox.

Are you 100% absolutely positive that my loans will default? What if I continue to make payments in the same fashion that I was before? I thought default applies to an account where one is unable to make a payment in a timely manner?

I spoke to the customer reps and they stated once the bankruptcy stamp is off the account, I can request to take off the co-signer. But I have researched online and Sallie Mae gives a crappy time taking off co-signers.

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It is going to affect you worse 3-5 years down the line. I hope with your 200k loans there is an MD or JD after your name. You are going to need this

You are correct - I have an MD after my name. The situation you propose is quite dire and scary. What can I do to prevent this? My parents spoke to their bankruptcy lawyer today and he stated I should not be affected - according to him, this is just temporary hold and if I continue to make payments in a timely manner all should be well. Is this true or a fib?

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Your federal loans...if you have not consolidated them yet with the Direct Loan Program....get it done now!!

Can I still do this even when they are in bankruptcy status? Also, how do I go about doing this?


Thanks again for your help.

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Are you paying on the private or federal?Your parents did not cosign for the federal. Which loans are you paying on?

My private loans were in deferrement, while I was paying the federal loans via income-based repayment ( I am resident)
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Botttom line...you will not get a cosignor release especially after bankruptcy. Cosignor release happens after making 24 on time payments immediately after going into repyament. If you are in partial payment, you wont qualify. Once the bankruptcy has been discharged, the loan WILL default.....you both need to be aware of this. I dont care what they tell you now....it will happen. The general customer service reps do not know or understand the complications of bankruptcy. Will the bankruptcy stay, they should not be talking to you at all. Your payments should be going to a lockbox.

Are you absolutely positive that my loans will default once the bankruptcy is discharged? I have never been late on payments and have been paying them as required. I thought one only defaulted if they he/she is unable to make required payments? The customer reps do not have much knowledge of this issue and each one of them has a different answer. Can you please explain as to why they would default if I continue to make payments?

I had my parents call their bankruptcy attorney and, according to him, I should not be affected at all if I continue to make payments as per Sallie Mae. I am not sure if this is true or not, but it definitely collides head on with your input???

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It is going to affect you worse 3-5 years down the line. I hope with your 200k loans there is an MD or JD after your name. You are going to need this. Your federal loans...if you have not consolidated them yet with the Direct Loan Program....get it done now!!!

You are correct ??? I am an MD. The scenario you describe is rather bleak and scary. Is there a way that I can escape from penalized down the road?

Also, I do no have all of the federal loans consolidated. If I recall, some of them have low rates (2-4%), while others are a bit higher. Is it a good idea to consolidate? What are the going rates now? Also, can I still do this if they are frozen in bankruptcy?

Thanks again for you help and your advice.