If my dad co-signed a car loan for me and now I am looking at having to file bankruptcy, how will this affect his credit?

UPDATED: Jan 17, 2015

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If my dad co-signed a car loan for me and now I am looking at having to file bankruptcy, how will this affect his credit?

Asked on January 17, 2015 under Bankruptcy Law, Ohio


M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

A bankruptcy discharge only eliminates the debtors obligation to pay discharged debts;it does not affect the responsibility or liability of the co-signers. However, how much protection they will receive depends on what type of bankruptcy that is filed.

In a Chapter 7, all collection activities against must stop due to something called the "automatic stay", howeverhe  tprotection of the stay does not extend to co-signers. That having been said, a co-signer can still be protected from creditors if the debtor "reaffirms" the debt (i.e. once again assume obligation for the debt) or pays the debt off (after the bankruptcy filing). In a Chapter 13 a co-signer is offered more protection. They are included as part of the automatic stay. However,  creditors can still ask the court to lift the stay under the following circumstances: it was the co-signer who actually received the consideration for the creditor’s claim; the debtor is not proposing to pay the debt off in full through the Chapter 13 plan; the creditor will suffer irreparable harm if the stay continues.

Since this all gets somewhat complicated, you really should consult a bankruptcy attorney for further help as to your specific situation.




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