cosigner liability Archives - Chicago Bankruptcy Lawyer

cosigner and vehicle payments in bankruptcy

Terrance Leeders — Wed, 28 Jan 2009 22:14:00 +0000

There is often some confusion with cosigned vehicles and a bankruptcy filing.
One questioner asked me : “my ex if filing for bankruptcy and he is the co signer on my car and he wants to add that in to the bankruptcy. will they repo my car or how can i protect myself from getting my car taken if he adds it?????”

Answer: If you are current and maintain the payments and insurance, you should be fine and can keep the vehicle when a cosigner surrenders their interest in the vehicle.

In other cases, where you would be the debtor in the bankruptcy, and are cosigned on someone else’s car, you can walk away from the debt, discharging it, leaving the payments to the cosigner.

Alternatively, if the vehicle is yours, and you file bankruptcy, you can continue to make payments on the vehicle and reaffirm the debt, thereby protecting your cosigner. Remember, a cosigner is always liable for the debt, regardless of who has the asset.

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Cosigner responsibility

Terrance Leeders — Mon, 23 Jun 2008 16:06:00 +0000

I was recently asked how a bankruptcy affects a cosigner.

Question: Hello. I filed for bankruptcy and was discharged a year and a half ago. At the time I had a car lease that was paid to date, but was still a part of my bankruptcy. (My lawyer advised me to turn in the vehicle so that I would not be responsible for extra fees and/or other things) My mother co-signed on this loan for me. My mother received a letter from the lender stating she owed them money for the return of the vehicle and for them to resell the vehicle. I have also received letters recently stating that money is owed. Is there a certain amount of time that these creditors can come after co-signers for the payment of things like this? I do not want my mom’s credit to be affected by something like this and hope to resolve this situation as soon as possible. I look forward to hearing your answer.

Answer: Regardless of what you did in your case, your mom, as a cosigner can be held to the contract that she signed with the lender. If you turned in the vehicle early, then she would be responsible for the balance of the lease, minus what the creditor recouped in the resale. Mom would need to read the car loan contract for her responsibilities ,as the creditor can always go after her to collect on what is still owed. Unfortunately, that is why creditors get cosigners, so that when one party doesn’t pay, they can collect from the other. Unfortunately, the only thing that the bankruptcy did, is discharged your obligation, it doesn’t discharge a cosigner’s obligation.

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cosigner liability Archives - Chicago Bankruptcy Lawyer

cosigner and vehicle payments in bankruptcy

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Cosigner responsibility

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