Options for Defaulted Loan

[bel_912]

I have a 15k student loan with Key Bank, which my mom cosigned for. Last year my mom claimed bankruptcy which defaulted my student loan and she didn't tell me about it. I found out the hard way when I tried buying a house. I called Key Bank's bankruptcy department and they gave me a few options.

1. Continue paying my monthly payment but I will not receive any paper statements or any kind of documentation showing proof of payment. They said they are not able to send me anything due to the protection of my mom's bankruptcy.
2. Settle the loan for a lesser amount. According to the rep, they will only accept 70-75 percent of the balance.
3. Pay the full amount.

Out of those options, I would prefer making monthly payments but I'm very weary of making monthly payments and not receive any proof of payments. They said I will have to track it myself and call in to check my balance. I can try to settle but how does that affect my credit after settling? I'm stuck in a bind since I'm new to all of this. I will appreciate it if anyone can provide me with advice on handling my situation.

[Lian]

In my opinion, you should consult a BK attorney.

My first reaction is that her BK should only relieve her former obligation as a consignee/maker of the loan, and that you, as the principal, should be entitled to continue as the sole party to the loan. That would probably require their agreement to renegotiate, but I am sure this situation arises all the time as an outcome of the BK of a consignee.

You need to know the applicable law and case precedent. I would not rely upon a forum for such advice.