QUESTION
Is there a way to continue full payments to the lender and keep the payments and loan in good standing?
Asked on Nov 29th, 2015 on Bankruptcy - Michigan
More details to this question:
About a year ago I was in the hospital for a few days, got behind on bills and it just kept piling up. I now have a tremendous about of debt including hospital bills. I am more than likely filing chapter 13 and had a question regarding the co signer on my car loan. Because I will be paying the car loan back in my bankruptcy plan does it effect my co signers credit or credit score? If it does, is there a way to continue full payments to the lender and keep the payments and loan in good standing?
8 ANSWERS
Commercial & Bankruptcy Law Attorney serving Powell, OH
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Ronald K. Nims
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It depends on the terms of the loan and which state you live in. Most states allow debtors to pay off cosigned loans in full to protect the cosigners, a few don't. Even where they allow paying off cosigned loans, they are not going to allow massive interest rates. So if you've got a 20% rate on that car loan, forget about it.
Answered on Dec 09th, 2015 at 2:59 AM
2 Awards
As long as you are current on the car loan, and remain current, there is no need to pay the car loan through the plan. Just keep making payments and your co-signor will be unaffected.
Answered on Dec 07th, 2015 at 5:05 PM
Bankruptcy Attorney serving Madison, WI
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Richard B. Jacobson & Associates, LLC
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Yes. In a chapter 13 you may classify a claim on which there is a co-debtor for 100% repaymentso long as you have enough money going into the Plan to cover that payment and any other payments you must make. Find a good lawyer: it's almost always worth it.
Answered on Dec 07th, 2015 at 5:05 PM
If you are current on making your car payment, it might make better sense to pay this debt outside of the Plan. By paying in the Plan, there is often a delay in the lender receiving their payments which could show up on your co-signer's credit report.
Answered on Dec 07th, 2015 at 5:04 PM
Consumer Bankruptcy Attorney serving Los Angeles, CA
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Orantes Law Firm
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When did you acquire the vehicle? If within 910 days of the date you file your Chapter 13 petition, what you seem to be asking to do is actually what you are obligated to do i.e., continue to make full payments to the lender and keep the payments and loan in good standing. If you do so, the co-debtor stay under Chapter 13 would protect the co-debtor from collection activities.
Answered on Dec 07th, 2015 at 5:04 PM
As long as the car is paid in or outside of bk it should not affect them.
Answered on Dec 07th, 2015 at 5:04 PM
Chapter 13 is the perfect solution for your stated goals, because it provides your co-signer protection of the bankruptcy stay, and it requires you to write into the chapter 13 plan your intentions for the car loan. Therefore, if you meet your obligations to pay your car loan during the life of your plan, your bankruptcy should have no effect on your co-signer's credit.
Answered on Dec 07th, 2015 at 5:04 PM
Appellate Attorney serving Grosse Pointe Farms, MI
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Musilli Brennan Associates, PLLC
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See a bankruptcy practitioner. The answer is yes, but do realize if you do not keep up the payments in full and timely the co-signer will be affected.
Answered on Dec 07th, 2015 at 8:16 AM