Chicago bankruptcy attorneys understand that sometimes it seems as though no good deed goes unpunished, this is sometimes the case with co-signers.
Chicago Bankruptcy Attorneys' Advice for Co-Signers
Co-signing a loan is something you should never take lightly. For some people it's a gesture of good will and they are just attaching their good name and financial history to a loan to help someone they believe will be financially responsible. For other people it's a family obligation of sorts and parents and grandparents often feel they should help a child get something they probably cannot afford. And for others very little thought goes into a co-sign situation. The one thing this Chicago bankruptcy attorney wants everyone to take away from this is that no co-sign situation should be entered into lightly. In fact, if you can't afford the loan then you shouldn't co-sign.
Chicago Bankruptcy Attorneys Explain What Happens if Borrower Goes Bankrupt
When you co-sign a loan you're accepting financial responsibility for the loan if the original borrower defaults for any reason. This means that if the borrower declares bankruptcy then you are the person the creditor will instantly turn to for repayment of the loan.
When the borrower files a Chapter 7 bankruptcy they are seeking protection from their debts because they are financially no longer able to handle them. The protection offered by the Chapter 7 extends solely to the filer or his/her spouse if they're filing jointly, and not to a co-signer.
When a borrower files a Chapter 13 bankruptcy they are basically forced into a repayment plan and they will still be responsible for most of their secured debts, a category which most co-signer debt falls into. So while the Chapter 13 bankruptcy is in effect, three to five years,
the co-signer is safe, but once the bankruptcy is over the creditor may go after the co-signer for any remaining unpaid debt.
If you're a co-signer and the primary borrower on the loan is declaring bankruptcy, you should see the help of a Chicago bankruptcy attorney immediately to protect your assets.