Unlike Chapter 7 Bankruptcy, which will remove your obligations on a co-signed loan leaving your co-signor completely responsible for the debt, in a Chapter 13 bankruptcy, you can protect the co-signor. This should be a consideration in choosing what type of bankruptcy to file. If you have loans or credit cards that someone has co-signed with you and you file a Chapter 7 bankruptcy, the creditor cannot collect from you so they will have to pursue the person that co-signed the loan or credit card application with you. If you had a relative or friend that co-signed a loan or credit card application so that you could get the credit, you may not want to force them to take the full legal responsibility for the debt. For more information on co-signed debt in a Chapter 7 bankruptcy, check out my article on this subject.
An alternative to leaving the co-signor legally responsible for the debt is to file a Chapter 13 bankruptcy and make provisions for the debt in the Chapter 13 plan. There are several ways that you can provide for the co-signed debt in a Chapter 13 bankruptcy. For more information on how this type of debt can be handled check out my article on co-signed debts in a Chapter 13.
If you have co-signed debts that are causing you problems, contact us or call 320-2010 today to schedule an appointment. I will meet with you and discuss the best way to handle the debt.