Shouldn’t Key Bank Have Backed Off During My Bankruptcy?

“Dear Steve,

I graduated college in August 2010 and filed Chapter 13 bankruptcy in September of 2010 to get rid of some credit card debt I had. Under the bankruptcy I was told by my lawyer that my student loans would go into the automatic stay and be protected there until the discharge of my other debts was granted.

This was the case for all but one private student loan through KeyBank which I did not find out until after I received my court discharge papers in March of 2011.

KeyBank put me straight into default and charged off my loan during the time I was told I was in automatic stay, which I was told meant they were to have no contact with me and I did not owe anything.

Is this legal? My old lawyer refuses to be of any help. I have been trying to clean this up for some time now but it is with KeyBank Recovery Payment Processing and they claim the total amount of the student loan is due, period. I assumed the lawyer would have taken due diligence in this matter to tell me if I should be paying on this loan in the meantime.

How can I fix a charged off student loan during a Chapter 13 bankruptcy that I did not file as part of the bankruptcy? Should I be contacting a credit lawyer or is this some type of legal loophole I am missing?


Dear Danny,

If your bankruptcy attorney is not being helpful you should seek the advice of a second bankruptcy attorney and I’d suggest even paying a consultation fee if they require it. What you need now is legal clarity about your loan and your bankruptcy.

Do You Have a Question You'd Like Help With? Contact Debt Coach Damon Day. Click here to reach Damon.

The fact the loan was not listed would not prevent it from being protected by the chapter 13. It sounds like a mess of miscommunication.

Did you provide that lender with documentation of your chapter 13?

See also  I'm a Nurse and Just Barely Making Ends Meet But My Husband Won't Help Financially. - Kaye

That aside, I’m confused, you said your chapter 13 only lasted about seven months. Are you sure you didn’t file a chapter 7 bankruptcy?

So let’s say you go back and unwind the clock on this one loan. It seems that since the discharge in March of 2011 you are in default. It’s not clear what the advantage would be now 3.75 years later to go back and make them not put you in default till the discharge.

You refer to student loans, plural, which makes me think you had other student loans as well. What happened with those loans after the discharge? They should have picked up where they were before the discharge. It is possible that some private student loans can be discharged in bankruptcy and if you read this you’ll find out which are the most likely.

Please post your responses and follow-up messages to me on this in the comments section below.

Damon Day - Pro Debt Coach

Follow Me
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
Steve Rhode
Follow Me