If a co-signer files Chapter 7 bankruptcy, that person’s obligation to pay the debt is wiped out (unless, of course, that person “reaffirms” or re-obligates himself to pay the debt). The child is not paying the debt, surrenders the car, and then files chapter 7.
What happens if my co signer filed bankruptcy?
If you are the cosigner of a loan and you file bankruptcy, then you are no longer liable for the debt if the person you cosigned for stops paying. As long as they pay the debt, they can keep the vehicle and their credit history will not be affected by your bankruptcy filing.
How does bankruptcy affect a co signer’s credit score?
At most, the co-signer’s credit report will receive a notation, on the particular debt in question, that a bankruptcy was filed on that debt. This should not affect the co-signer’s credit score. Can Creditors Come After Co-Signers After Kentucky Bankruptcy Proceedings Are Started?
What happens to the cosigner of a car loan in bankruptcy?
After you file bankruptcy, the co-signer becomes liable for the debt. At that point, the co-signer must either pay the debt off or can file for bankruptcy themselves to no longer be liable for the loan on the vehicle. If you are the co-signer of a loan and you file bankruptcy,…
Can a cosigner be liable for a discharged debt?
Pay off the debt. After a Chapter 7 discharge, you are no longer obligated to pay back any discharged debts. However, this does not preclude you from voluntarily paying off your debts after the bankruptcy. If you want to protect your cosigners and guarantors, you can continue making payments on the debt until it is paid off.
What happens to a cosigned loan in Chapter 7?
Chapter 7 protection. If the borrower reaffirms the loan during the bankruptcy, they take back financial responsibility of the loan obligation. You would be protecting the other signer because you let the lender know you’re excluding the loan from bankruptcy and will continue paying as promised.
