Chapter 7 Success Lawyers Chicago - Co-Signer Remains Liable

Co-Signer Remains Liable After Original Debtor Files Chapter 7 Bankruptcy

A person who co-signs a debt remains personally liable on that debt despite the fact that the co-debtor files for Chapter 7 bankruptcy. This scenario is very common with regard to auto loan debts. A typical example would be when the person who is going to possess and drive the vehicle, cannot afford that vehicle alone. That person then goes out and finds a willing cosigner. It could be a family member or a friend or co-worker, or anyone else willing to put their name on the line for this person. Often times, the owner of the vehicle cannot make the payments, the vehicle is repossessed, and sold at auction with a deficiency remaining on the vehicle. If the original owner filed for Chapter 7 bankruptcy relief, that person has eliminated the debt effectively upon himself. The auto lender will then look to the cosigner, provided that the co-signer has not filed for bankruptcy relief. Now the co-signer can either pay the debt, or file bankruptcy on his own. However, there are times when the co-signer is not in a position to file a bankruptcy and certainly is not willing to do so based upon one co-signed debt. The end result is that the co-signer will remain liable for any amount due on that vehicle. Once the original owner files for Chapter 7 bankruptcy, the lender cannot look to that person for payment.

Word to the wise; be very careful if and when you ever decide to co-sign for someone else.

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