Previously, you may have had little credit history, a less-than-ideal credit score, and required a loan worth more than you could afford to repay. Under such circumstances, a lender may have asked you to supply a guarantor for your loan. Otherwise known as a co-signer, this individual would be held responsible for ensuring that you do not default on your loan. However, if hard times fall upon you and you somehow find yourself facing bankruptcy, your co-signer may possibly be doubly responsible for your actions. With that being said, please continue reading to learn how bankruptcy affects co-signers and how an experienced Rockland County bankruptcy attorney at The Law Offices of Allen A. Kolber, Esq., P.C. can help you protect them from your actions in any way possible.
How does my bankruptcy filing affect my co-signers?
After your bankruptcy case, the court may grant a discharge of your eligible debts. This means you may be relieved of your responsibility to pay off these specified debts. However, the same may not be said for your existing co-signers. In the end, though, this may all depend on which consumer bankruptcy type you initially petitioned for.
On the one hand, if you file for Chapter 7 bankruptcy, the automatic stay, which stops all collection activities during your proceedings, does not extend to your co-signers. This is to say that your creditors may continue to go after your co-signer and hold them accountable for their payment responsibilities at this time. They may continue such collection activities through to the end of your case, as again, the final debt discharge does not apply to your co-signers, either.
On the other hand, though, Chapter 13 bankruptcy offers more of a cushion for your co-signers. That is, with this bankruptcy type, an automatic stay may include co-signers of consumer debts. This is otherwise commonly referred to as the Chapter 13 codebtor stay. What’s more, you may be given the opportunity to help pay off your co-signed debt through your court-ordered three- to five-year repayment plan.
How can I protect my co-signers in the event of bankruptcy?
You may be a debtor who does not qualify to pursue a Chapter 13 bankruptcy case. In turn, you may be unable to offer your co-signers the little protection this bankruptcy type offers. Rest assured, though, you may still work to protect your co-signers throughout your Chapter 7 bankruptcy proceedings in one of two ways.
Firstly, you may reaffirm your secured debts; in this way, you may surrender your offered benefit of a bankruptcy discharge and remain liable for your outstanding debts. Secondly, you may voluntarily continue making monthly payments on your outstanding debts during your bankruptcy proceedings. Either way, you do not leave your cosigners with the bad end of the deal, so to speak.
In conclusion, at this time, what matters most is that you retain strong legal representation to get you through this critical case. Please contact a skilled Rockland County bankruptcy attorney from The Law Offices of Allen A. Kolber, Esq., P.C. today.
