QUESTION
Will the co signer be liable if my son files for chapter 7 bankruptcy?
Asked on Feb 27th, 2012 on Bankruptcy - California
More details to this question:
My wife co-signed on a Truck for her son. I didn't. Things have gone bad and he has filled Chapter 7 and now is divorcing his wife. He has made some payments on the truck after the Chapter 7. We recently gave him money to bring the loan current. Now we may take over the payments for awhile. My question is what happens if the truck is returned to the loan company? I understand Chapter 7 that they can not come after her son for more money if he didn't sign anything with them. What about us? My wife didn't sign anything during the Chapter 7. What will happen to us?
13 ANSWERS
Bankruptcy & Debt Attorney serving Syracuse, NY
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Theodore Lyons Araujo
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Yes.
Answered on May 30th, 2013 at 9:02 PM
If the cosigner does not ensure the loan is current then the bank can pursue action against the cosigner who did not and does not file for bankruptcy relief.
Answered on Mar 05th, 2012 at 3:13 PM
Bankruptcy Attorney serving Seattle, WA
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The Law Office of Marc S. Stern
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They can certainly come after your wife. Since you did not consent to the credit, and do not under any circumstances do so now. A gift of community credit requires the consent of both members. Your wife created separate liability but there is no ability to collect as long as you don't join in or consent to the transaction.
Answered on Mar 05th, 2012 at 11:25 AM
Since the wife did not file Chapter 7, and if she is the cosigner or co-debtor, she would be responsible for any debt owing on the vehicle.
Answered on Mar 01st, 2012 at 7:28 PM
Domestic Relations Attorney serving Huntsville, AL
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Ferguson & Ferguson
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If your wife co-signed on the debt, she will be responsible for it if he doesn't pay it.
Answered on Feb 29th, 2012 at 8:32 PM
Bankruptcy Attorney serving Livonia, MI
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Charles J. Schneider, P.C.
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It was not your wife's bankruptcy case therefore she continues to owe on the loan for the vehicle until it is paid for or she files bankruptcy.
Answered on Feb 29th, 2012 at 11:28 AM
Bankruptcy Attorney serving Concord, CA
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William Rubendall Attorney at Law
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If a debtor in bankruptcy doesn't pay for the secured debt, the co-signer is liable for the full balance.
Answered on Feb 29th, 2012 at 10:51 AM
Chapter 7 Bankruptcy Attorney serving Milwaukee, WI
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Law Offices of Deborah A. Stencel
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Yes. If your son files Chapter 7 and does not continue to pay for the truck, his debt will be discharged but the co-signer's liability remains. The most likely scenarios is that the truck will be repossessed and sold at auction. The auction proceeds will be subtracted from the loan balance and the deficiency balance can be obtained from the co-signer. This will also negatively impact the co-signer's credit in all likelihood. In this situation, all the co-signer can do if make arrangements to pay for the car herself or to file a bankruptcy of her own. Sorry to be the bearer of bad news. Best wishes.
Answered on Feb 29th, 2012 at 10:47 AM
Bankruptcy: Creditor Attorney serving Grand Island, NE
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Milner Neuhaus & Judds
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If you wife is a cosigner on the debt and her son defaults and eliminates the debt in bankruptcy, the lender can proceed against your wife. The lender will probably recover the vehicle, sell it and seek the deficiency. However, as a cosigner, your wife will be entitled to notice and certain remedies to retain the collateral and pay the debt prior to sale.
Answered on Feb 29th, 2012 at 10:46 AM
Business Bankruptcy Attorney serving Raleigh, NC
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J.M. Cook, P.A.
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As a co-signer you are actually a "co-maker" for the most part and are jointly and severally liable for the entire amount, regardless of whether the other party went through bankruptcy. Bottom line - your wife is on the hook for the shortfall.
Answered on Feb 29th, 2012 at 9:46 AM
Daniel James Wilson
In the event of default you will be responsible for the debt.
Answered on Feb 29th, 2012 at 7:14 AM
Bankruptcy Attorney serving Hampton, VA
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Haven Law Group, P.C.
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Yes, the co signer will still be liable.
Answered on Feb 29th, 2012 at 5:38 AM
Bankruptcy Attorney serving Hayward, CA
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Carballo Law Offices
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Your wife will be responsible for the deficiency on the truck. If not paid it will be repossessed and sold at auction and the balance owed and cost of repossession and auction will be collected from your wife. She owes the debt since she is on the contract. That is the purpose for having another person on the contract or a co-signer. Your wife was left holding the bag.
Answered on Feb 29th, 2012 at 4:32 AM