How Does Bankruptcy Affect a Co-Signor?
A San Jose Bankruptcy Attorney explains how bankrupty affects a co-signor...
Often times an individual will either not have established enough credit history or just does not have the credit score to obtain a loan with an appropriate annual percentage rate (“APR”). When this occurs, often times they will recruit their spouse or family to co-sign on the loan. This places the co-signor on the line for the debt should the signor fail to make timely payments.
So what happens to the co-signor when the original debtor files for bankruptcy? Schedule H of the bankruptcy petition is where all co-signors on loans should be listed. These individuals receive notice of the filing and are given an opportunity to file a motion with the court in order to either reaffirm the debt, or likely force the debtor to surrender the secured object and distinguish the deficiency upon discharge. Filing for bankruptcy does not automatically terminate the co-signors liability, however it does place an automatic stay on the creditor from seeking payment from the co-signor. This third party stay remains in effect as long as the bankruptcy stay remains.
If you have questions regarding Bankruptcy in San Jose please contact us at 408.279.2288 for a free consultation or visit www.bkanswers.com and we can connect you with one of our experienced San Jose Bankruptcy Attorneys. After you have spoken with one of our downtown San Jose bankruptcy attorneys, we can schedule you for a free face to face appointment in an office location nearest you. Our team of San Jose Bankruptcy Lawyers can assist you with all aspects of your bankruptcy or bankruptcy litigation case. If you have questions about filing a Chapter 7 bankruptcy, a Chapter 11 bankruptcy, a Chapter 13 bankruptcy, or would like to learn more about bankruptcy litigation, legal debt settlement, mortgage modification, lien stripping, cram down, stopping a foreclosure, wage garnishment, asset protection, discharging a debt, etc. we can help! We have bankruptcy attorneys located throughout California and Oregon who can assist you with all of your debt resolution questions. Please feel free to complete our free online bankruptcy evaluation and we can quickly determine if you are a qualified candidate for bankruptcy. We look forward to hearing from you, San Jose and the South Bay!
