If you are considering filing for Bankruptcy, Contact the Texas Bankruptcy Attorneys at The Law Offices Of R.J.Atkinson for a free bankruptcy evaluation. Co-signers often tend to be relatives, friends, and those closest to you, so it’s important to make an informed decision by knowing what the consequences of filing for bankruptcy will have on a co-signer. We can explain the how bankruptcy can affect co-signers at a free initial consultation.
When you are facing financial hardship or overwhelming debt, filing for bankruptcy may be the best option to get back in control of your finances. Whether you file bankruptcy to get rid of debt, reduce debt, or reorganize debt, you should examine all the consequences that bankruptcy will have on you as well as any co-signers of your debts. It’s important to determine whether your co-signer may be compelled to pay your debt if your file for bankruptcy. Obviously, whether a co-signer has to pay or not depends on the type of bankruptcy you file for and the specifics of your bankruptcy plan.
What is a Co-signer?A co-signer is a person who signs and guarantees that if you don’t pay, they will. In essence, co-signers are a backup. They sign for the debt along with you to back you up and assure a creditor that the obligation will be paid. A co-signer is the person who is the guarantor of the contract. If you don’t pay then the co-signer is obligated to pay. The principal borrower and the co-signer are both equally responsible for the debt they have signed for. Being a co-signer obligates you to pay another person's debt arising out of a contract or promissory note for a vehicle, mortgage, or student loan, if that person defaults and fails to do so.
Co-signers and Bankruptcy
Chapter 7 Bankruptcy: In a Chapter 7 Bankruptcy bankruptcy, only the debtor is protected if the debt is dischargeable, however the co-signer will still be liable to pay the debt. In a Chapter 7 bankruptcy, your creditors will still have the right to collect from the co-signer pay off the outstanding payments. If you are considering Chapter 7 Bankruptcy, remember that the discharge in bankruptcy only extends to the person filing Chapter 7. Any co-signers are still liable for debts discharged in a Chapter 7 Bankruptcy.
Chapter 13 Bankruptcy: If you file for Chapter 13 Bankruptcy, the co-signer is protected under most conditions and will not be pursued during the pendency of the Chapter 13 case. As long as the Chapter 13 Bankruptcy repayment plan is paid pursuant to the pan and the case remains active, the co-signer receives protection. When the Chapter 13 plan is complete, the co-signer may be liable for any outstanding balance not paid in the plan.
Contact the Texas Bankruptcy Attorneys at The Law Offices Of R.J.Atkinson for a free initial consultation. If bankruptcy is an option to deal with your debts, we may be able to help you. If you have questions about Co-signers and Bankruptcy or Debt Relief services outside of bankruptcy Contact Us.
Contact Texas Bankruptcy Attorney R.J.Atkinson: 800-436-9056