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Will filing bankruptcy affect my cosigner?
How Bankruptcy Affects Cosigners and Guarantors. Your bankruptcy discharge only eliminates your obligation to pay discharged debts. It doesn’t affect the responsibility or liability of the cosigners and guarantors on your debts.
How do I protect my cosigner when filing bankruptcy?
If you want to protect your cosigners, you can do so by paying off the debt through a Chapter 13 repayment plan. Unlike Chapter 7 bankruptcy, your cosigners are protected to a certain extent by the Chapter 13 codebtor stay (discussed below).
Can a co signer be removed from a loan?
When a loan allows cosigner release, the lender sets conditions up front. If the conditions are met, the lender will remove the cosigner from the loan. The lender may require two years of on-time payments, for example.
Can you buy a house after Chapter 7 with a co-signer?
Can you buy a house after Chapter 7 with a co-signer? Yes, having a co-signer can improve your chances of getting a mortgage after a bankruptcy.
Can a cosigner have their wages garnished?
Lenders can garnish the wages of co-signers. If the borrower and co-signer cannot repay a loan, the lender can sue the co-signer to garnish wages and even property in order to satisfy the repayment.
What happens to a cosigner when you file bankruptcy?
If you have a cosigner on an unsecured debt that is discharged in bankruptcy, your cosigner will still be responsible for the balance due. The creditor will not be able to collect the debt from you, but it can collect it from the cosigner. Example.
What happens to cosigners and guarantors after a Chapter 7 discharge?
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.
Who is responsible for a cosigner’s debt?
The borrower is first responsible for making payments, and the borrower will be the one contacted if a payment is missed. The cosigner is not a joint holder of the debt.
What happens to a co-borrower in a chapter 13 bankruptcy?
If you don’t pay the whole debt and have to continue making payments after your bankruptcy ends, your co-borrower won’t be affected as long as you make the payments. Generally, the only debts that extend beyond a Chapter 13 bankruptcy are mortgage loans.