How will Chapter 7 or 13 bankruptcy affect my co-signed loan?
How will Chapter 7 or 13 bankruptcy affect my co-signed loan?
If you filed for Chapter 7 or Chapter 13 bankruptcy, you can still continue making monthly payments on your co-signed loan. However, if you fail to do so, your credit report will reflect "no payment" and/or collections. This is bad for both you and your co-signer, but there are steps you can take to protect your credit in the future.
A co-signer helps the borrower by securing collateral, but if the borrower defaults on the loan, the creditor may pursue the co-signer's assets. Fortunately, the court can lift the stay if the co-signer has received a benefit from the loan.
A bankruptcy can affect your co-signer's credit and personal liability. When a co-signer files for Chapter 7 or Chapter 13 bankruptcy, the creditor cannot collect on the debt. However, a bankruptcy will affect your co-signer's credit, which will impact your credit rating.
When you file for Chapter 13 bankruptcy, the creditor cannot collect from you and your co-signer. Therefore, it is in the debtor's best interest to file for bankruptcy. This way, you can protect your co-signer's interest while obtaining debt relief.
In a Chapter 7 bankruptcy, you can keep your home. However, you must keep the mortgage payments up to date. Depending on your state homestead exemption, you can still apply for a mortgage after filing for bankruptcy. Some mortgages have a mandatory waiting period after bankruptcy, but some do not. However, it is crucial to rebuild your credit score before applying for a mortgage after filing for bankruptcy.
If you have any questions or in need a Chapter 7 and 13 Bankruptcy Attorney, we have the Best Attorneys in Utah. Please call this law firm for free consultation.
Ascent Law LLC
8833 S Redwood Road Suite C
West Jordan UT 84088
(801) 676-5506
