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If I Have A Co-Signer, How Will It Affect Them If I File For Bankruptcy?

This is a very common question, because most people are concerned about whether the co-signer (who is usually a friend or a relative) will adversely affected. Simply put, if you file for bankruptcy and a co-signed debt is included to be discharged, then the creditor will still have the ability to demand payment from the co-signer. That person can either negotiate a settlement with the creditor, assume the regular payments, or file for bankruptcy themselves.

While this may not seem like the ideal situation (especially for the co-signer), it should pointed out that when an individual signs his or her name to a financing application in support of someone else, they are in essence taking on the risk that you might default on the loan in some fashion. And it is made clear to the co-signer (when he or she signs the documents) that in the event of a default of some kind, the creditor has the option of making a demand for payment on the loan from the co-signer. Most co-signers undoubtedly attach their name to a friend or relative because the person seeking to get the loan is unable to on his or her own (because of a poor credit rating, or because the lending institution has determined that the person is too much of a risk by themselves). But the risk is always there.

A variety of debts can have co-signers: credit cards, houses, cars, financing agreements, rent-to-own, etc. In a St. Louis Chapter 7 bankruptcy, unsecured debts such as credit cards and medical bills are discharged (even those that are co-signed). If you wish to keep assets such as a home or automobile, you may reaffirm those debts. But you also have the option of surrendering them as well (even those that are co-signed). In a St. Louis Chapter 13 bankruptcy, secured and unsecured debts are handled largely the same way, with the exception that a Missouri Chapter 13 is described as a repayment plan in which certain debts are paid back over a period of three to five years.

The ultimate decision of whether to file for bankruptcy when you have co-signed debts is obviously a personal one. Because of the involvement of someone else who may be affected, you should clearly take the time to consider the possible outcomes. But if you do file for bankruptcy, the St. Louis bankruptcy attorneys at Brinkman & Alter, LLC can help guide you through the process so that you receive the fresh start / clean slate that you deserve. And as always, all phone conversations and office consultations are free of charge.