Bankruptcy and Co-Signors
What do you do when you have co-signed for a loan for a person that is going through bankruptcy? You will be just fine as long as they decide to keep the item that you cosigned for. If it is a house or a car and the person who is filing for bankruptcy plans on keeping the item then you will be fine, they have to keep making payments on the note in order to keep the item. If at any time they decide to let the house or car go back, then that is when you will run into problems. If you don’t want it to hurt your credit, you must either sell it or start making the payments and try to get a renter in there to make payments on the property. If you are on a credit card account with someone who is filing for bankruptcy, then you must try to get that person’s name off of the card prior to them filing. It won’t hurt your credit, but the creditor will close your credit privileges and you will have to make sure to make the payments even though you no longer have the buying power you once have. The way it will show on your credit report is that it is included in a bankruptcy proceeding, but that should be it. It shouldn’t reflect anything about you being in a bankruptcy. If you have any other questions related to a debt that you co-signed on, contact an attorney for advice.
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