How Bankruptcy Affects a Minneapolis, Minnesota Co-Signor
If you are considering filing bankruptcy, or have already done so and have a creditor who is a cosigner on the debt in your case you may wonder what will happen to them after you file.
Even though your personal liability for the debt is included in the bankruptcy discharge, the co-signor will still be liable. The bankruptcy filing should not affect the co-signor’s credit as long as they continue to pay the debt on time and according to the terms of the loan. The co-signor’s credit will be affected if payments are late or missed, just like if bankruptcy had not been filed. After a bankruptcy has been filed, online access to the debt and automatic payments may stop. This is true even if a cosignor is involved. If the debt is paid on time, it will be done by mail, in person (if available) or over the phone. Even if your co-signor didn’t file with you, online access and automatic payment will usually stop for both of you. In a chapter 13, there is a thing called a codebtor’s stay. This prevents creditors trying to collect certain debts even if the co-signor has not filed for bankruptcy. This means that creditors will not send statements to the co-signor or attempt to collect the debt even if the co-signor intends to continue paying. The co-signor must make payments voluntarily if they choose to.
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