QUESTION
Will my cosigner be affected thru all this even if I'm choosing to keep the new car?
Asked on Aug 11th, 2016 on Bankruptcy - Colorado
More details to this question:
I'm about to file for bankruptcy and surrender my car because of the amount I owe on it is not worth the car. I need to have a car for personal reasons because I have to pick my child up every other weekend. I'm thinking about getting one before filing bankruptcy and just reaffirm the new car. I'm really trying to figure this out before I do it. I don't want my cosigner's credit to be affected.
7 ANSWERS
Landlord & Tenant Attorney serving Thibodaux, LA
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The Louque Law Firm, L.L.C.
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If you file a Chapter 7 and surrender a vehicle that has a co signer, the co signer will absolutely be affected. They will be called upon to pay any amounts left over after the car is sold at auction. Incurring debt just before you file bankruptcy is also a terrible idea. While it may not be improper in your particular case, it could potentially bring attention you do not want to your bankruptcy case. I am not an expert on credit reporting issues but I believe any account you have with a co signer will have a notation that the debt was part of a bankruptcy filing. I am not sure if that affects the co signer's credit score.
Answered on Sep 09th, 2016 at 5:36 AM
Your co-signer's credit will be affected if you do not reaffirm the car loan, because the creditor will pursue them for any deficiency after they auction it off.
Answered on Sep 08th, 2016 at 12:20 PM
If you did not have a co-signer, I could offer you plenty of advice about ways to keep the car for its current value rather than what you owe on it. Because of the co-signer, you need to understand that your bankruptcy discharge will put the responsibility to pay this loan entirely on the co-signer. Returning the car will destroy the co-signers credit and will result in him/her being subject to a lawsuit for the difference in what you owe and what the car sold for when the car was auctioned.
Answered on Sep 08th, 2016 at 12:20 PM
Bankruptcy Attorney serving Madison, WI
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Richard B. Jacobson & Associates, LLC
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It's certainly good of you to want to protect your co-signer. But if you reaffirm on the car loan, you become responsible for the total amount still due on the car, and the debt is not discharged in BR. This may be a big favor to do a friend. There are various alternatives you might consider, such as surrendering the car and if the lender goes after your friend, then reimbursing him or her. Another, probably more economical course, would be to cut some extra money into repairing your present car. It will likely cost less than a reaffirmation, and you'll have a more reliable car to drive for at least a few years.
Answered on Sep 08th, 2016 at 12:19 PM
Bankruptcy Attorney serving Myrtle Beach, SC
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Law Office of Margaret L. Evans, PC
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YES - the cosigner will NOT have the protection of the automatic stay that you will and the creditor CAN seek the deficiency from the cosigner.
Answered on Sep 08th, 2016 at 12:19 PM
Commercial & Bankruptcy Law Attorney serving Powell, OH
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Ronald K. Nims
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As long as you pay on the car, your cosigner will not be affected.
Answered on Sep 08th, 2016 at 12:17 PM
The reason the lender asks for a cosigner is in case you don't pay, for whatever reason (including filing BK). The lender will go after the cosigner.
Answered on Sep 08th, 2016 at 12:16 PM