My question is, a couple of years ago, we co-signed a bank loan for a family member.
Everything was going well for a while, while the family member paid on the loan, a couple of times they were late paying, and we got notices saying such. It has been at least 2 years now since we got any notices saying they were late, so we assumed everything was fine. Just this last week, my daughter applied for a car loan, and the car company sent this paper to the bank in question, checking for the loan information, it came back, that because of our poor credit rating with this bank, the request is denied. We do not use this bank for our banking, only as a co-signer for the family member. After speaking with this bank today, they said the family member stopped paying on this loan a long time ago. When asked why we were never notified, they just said "they blew it off" but yet they couldn't wait to put this information on our credit report, so now our credit report states we are a bad risk for any type of loan. Shouldn't the Bank have been obligated to inform us that this was going on when the loan started to be unpaid? How do we handle this type of problem, should we contact a lawyer and see what could be done? Since we had no idea this was going on, how can we be held responsible and have our credit ruined

Thanks to who ever can give us some advise

This is the risk you take when you cosign a loan. You can contact the credit bureaus and protest the entry, but since the loan was defaulted you may not have an option there.

You can pay the loan then sue the family member.

Nope, the friend you co-signed for would have gotten the notices and they are the ones responsible to tell you. Actually the bank does not have to tell you until the day they send you paper work to get a judgement against you.

This is one of the high risks you do when you co-sign for anyone.

As noted by Scott you can pay all the money back, and then sue the family member since you are personally liable for the loan.