This part sucks. Having debt in your name is one thing, but when you have someone else on the hook for the same debt- well, that sucks. Occasionally, people think well if I file bankruptcy then the debt is wiped out as to me and my co-debtor right? Wrong! The reason banks want co-signors is if you default, co-signor is still on the hook and has to pay. Remember, if you file a Chapter 7 Bankruptcy, YOUR liability for the debt goes away, but your co-signor’s does not.
That is what happens when you file Chapter 7 Bankruptcy, but your co-signor does not. Your liability for the debt goes away but co-signor’s does not. Now I have a question for you. This is a serious question. Do you like your co-signor? I ask this because your liability to your co-signor goes away too. Now, if you don’t like your co-signor and don’t really care if this affects co-signor’s credit, then you do nothing. However, if you happen to like co-signor (maybe it’s your mom), then you could continue to make payments on that debt. As long as the payment on the debt is current, co-signor’s credit is not affected by you filing Chapter 7 Bankruptcy at all.
So, just because you filed Chapter 7 Bankruptcy, in and of itself, does not impact your co-signor’s credit. What will impact the co-signor’s credit is whether the loan payment is current or not. This is why student loan companies LOVE co-signors. Never co-sign student loans- ever. If you want the co-signor’s credit left intact, make sure the payment on the co-signed debt is current.
When the time is right, or when you are ready, reach out to a Minnesota law firm known for having the BEST CUSTOMER SERVICE of any other Minnesota bankruptcy law firm at www.kainscott.com.