Bankruptcy and co-signers

Get Legal Help Today

 Secured with SHA-256 Encryption

Bankruptcy and co-signers

I am filing chapter 7 in Idaho and I currently have a car loan with my father as a co-signer. I am current on all payments What will happen to the loan? Will it affect my father?

Asked on June 23, 2009 under Bankruptcy Law, Idaho

Answers:

MD, Member, California Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

Your father is a surety on the loan.  You need to check with your bankruptcy attorney to determine if your father's credit will be impacted, as it usually is when he is a co-signer on a loan.  Review the following from freeadvice.com: How does filing bankruptcy affect a co-signer?

The Bankruptcy Code uses the term "codebtor" to describe an individual who is also liable for a debt. A bankruptcy discharge doesn't eliminate the liability of a codebtor. There is, however, a "codebtor stay" in Chapter 13 cases that prevents creditors from pursuing rights against codebtors until the case is closed, which may be three or even five years after the petition is filed. There are exceptions to the codebtor stay, however. If the codebtor is the one who actually got the "consideration" for the debt (e.g., you cosigned a car loan for your daughter, who actually owns the car), if your Chapter 13 plan proposes not to pay the debt, or if the creditor's interests would be irreparably harmed by continuation of the codebtor stay, the creditor can seek relief from the court. And, if your debt arose in the ordinary course of business (as when you cosign an ordinary course loan to a corporation you control), there is no codebtor stay in the first place.

(Reviewed 11.14.08)

Try www.attorneypages.com


IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

Get Legal Help Today

Find the right lawyer for your legal issue.

 Secured with SHA-256 Encryption