QUESTION
What happens if I file Bankruptcy (Chapter 7) and my co-signer cannot pay the deficiency?
Asked on Jul 28th, 2014 on Bankruptcy - Virginia
More details to this question:
I had purchased a car with a co-signer but failed to obtain gap insurance. Shortly after the car was in an accident and totaled. After the insurance had paid out the loan there was a remaining balance I was held responsible for. I had since then gone through a debt management company to continue making payments on the loan and to keep the loan current. Presently my finances have taken a turn and I am in the process of declaring bankruptcy. What happens after I file Bankruptcy (Chapter 7) and the co-signer on the loan cannot pay the deficiency?
14 ANSWERS
Bankruptcy Law Attorney serving Austin, TX
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Law Office of Susan G. Taylor
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The co-signer will be liable.
Answered on Aug 04th, 2014 at 8:51 AM
If you filed bankruptcy and there is a deficiency on a co-signed loan, the co-signer will be 100% responsible to pay the deficiency...which is why creditors often require a co-signer.
Answered on Jul 30th, 2014 at 6:43 PM
Debt Settlement Attorney serving San Diego, CA
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Law Offices of Kathryn Tokarska
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The debt as to you can be discharged in your bankruptcy, which would make it uncollectible as to you. The co-signor remains responsible for the debt unless they file their own bankruptcy case.
Answered on Jul 30th, 2014 at 9:04 AM
bankruptcy Attorney serving Paul, ID
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Paul N. J. Ross Law, PLLC
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You have no liability on the deficiency and the co-debtor cannot hold you accountable for the debt. Unfortunately, without the co-debtor filing their own bankruptcy, they are responsible for the debt.
Answered on Jul 29th, 2014 at 6:54 PM
Bankruptcy Chapter 7 Attorney serving Los Angeles, CA
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The Law Offices of Peter M. Lively
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The co-debtor is still liable for the deficiency.
Answered on Jul 29th, 2014 at 6:51 PM
Commercial & Bankruptcy Law Attorney serving Powell, OH
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Ronald K. Nims
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When you are discharged in bankruptcy, you no longer owe the debt, regardless of whether your cosigner can pay it off. The lender can attempt to collect by suing your cosigner, garnishing his/her wages, etc. or the lender can write it off. ?In either case, the lender cannot attempt to collect from you.
Answered on Jul 29th, 2014 at 12:50 PM
The co-signer will have to file bankruptcy if they can't pay the deficiency. They can't sue you for it.
Answered on Jul 29th, 2014 at 12:50 PM
Domestic Law Attorney serving Vista, CA
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Ralph L. Williams
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The Chapter 7 Bankruptcy will only discharge your debt to the lender. After your discharge the lender can go after any co-signer on the loan.
Answered on Jul 29th, 2014 at 12:46 PM
Bankruptcy Attorney serving Livonia, MI
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Charles J. Schneider, P.C.
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He/she files Bankruptcy?
Answered on Jul 29th, 2014 at 12:46 PM
Debt Settlement Attorney serving Chicago, IL
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Law Offices of Daniel J. Winter
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The car finance company will sue the cosigner for the deficiency. Your Co-signer might have to file for bankruptcy or pay the debt.
Answered on Jul 29th, 2014 at 12:43 PM
Bankruptcy Attorney serving Walnut Creek, CA
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Alan E. Ramos Law Offices
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Most likely, the lender will sue the co-signer and obtain a judgment. They would then most likely execute on the judgment (garnish the co-signer's wages or levy on his/her bank account).
Answered on Jul 29th, 2014 at 10:00 AM
Probate Attorney serving Friendswood, TX
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Law Office of Melissa A. Botting
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If you file Chapter 7 Bankruptcy and the debt is discharge as to you, the lender has the right o try to collect from the co-signer. It would be up to the co-signer to work out a payment plan or file bankruptcy.
Answered on Jul 29th, 2014 at 9:18 AM
They creditor can elect to sue and garnish the co-debtor.
Answered on Jul 29th, 2014 at 9:17 AM
A bankruptcy will only discharge or eliminate the liability of the person filling the bankruptcy. The co-signer on the loan will remain liable on the debt. The creditor can continue collection attempts and sue the co-signer. Chapter 13 bankruptcy can be used to protect the co-signer from collection.
Answered on Jul 29th, 2014 at 9:17 AM