How can I make sure my chapter 7 bankruptcy does not affect my co-signor? 16 Answers as of July 08, 2013

I am planning on filing a Chapter 7 bankruptcy. A friend of mine Co-signed on a loan to get me a car when I moved home and the insurance is in both our names. Secondly, I am on his bank account so that I could have acccess to pay his bills, and take care of his bills while he was away on jobs. These are the only things in our names together. We are NOT married. I am going to continue to pay on the car til its finished (Reaffirming that debt) What do I need to do in order to make sure this doesn't fall on him in any way? Remove my name from his bank account?

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Mercado & Hartung, PLLC
Mercado & Hartung, PLLC | Christopher J. Mercado
You are required to schedule a cosigner. If you are discharged, the creditor can look to the cosigner for pmt. If you are reaffirming and keeping up with pmts, then there would be no need to go after the cosigner
Answer Applies to: Washington
Replied: 7/14/2011
Financial Relief Law Center
Financial Relief Law Center | Mark Alonso
There are two issues that you present here-The first is with respect to the car loan and your co-signer. Typically when a debtor files chapter 7 and there is a co-signer involved, that debt is only discharged with respect to the debtor and therefore the co-signer will be held liable for the debt if the debtor obtains a discharge and otherwise does not continue to make the payments. In your case, however, this secured debt is something that you intend on continuing to retain and pay, keeping up with the payments. Therefore, your co-signer would not be liable to make payments on this debt since you will continue to make payments. On a side note, with respect to your decision to "reaffirm" the property-you should consider speaking with an attorney regarding this decision. There may be ways to retain the property, and keep paying for it, without having to "reaffirm" it. Reaffirming a debt has serious consequences on your personal liability for that amount and should be carefully considered. Moving on to the second issue you present regarding the bank account-I would not recommend taking your name off of the bank account. This will be perceived by the trustee/court that you are trying to hide something and will be cause for further investigation or even dismissing your case. Many debtors are listed as a signee on other accounts for various reasons. Your best bet is to disclose this information up front on your bankruptcy petition schedule B and explain the reason why you were named on the account and that the money in the account is NOT yours. You may want to be prepared showing documentation that the source of the funds in the account belong to the owner and not you. Additionally, even if this money isn't yours, you may be able to exempt it altogether, so the issue is moot, even if the trustee may believe that part of it is yours. You should check the exemption scheme you are using to determine if it could qualify as exempt. Considering the issues you present here, I would recommend speaking with an attorney to further sort out these issues and protect your friend as well as yourself.
Answer Applies to: California
Replied: 7/13/2011
Tucker Legal Clinic
Tucker Legal Clinic | Samuel Tucker
I suggest you separate the bank account. Keep making regular payments on the vehicle account; otherwise, the creditor can look to cosigner for payment.
Answer Applies to: Mississippi
Replied: 7/13/2011
Burnham & Associates
Burnham & Associates | Stephanie K. Burnham
In order to protect your co-signor, you will need to be able to show the Bankruptcy Trustee that the Bank Account with your name on it is not yours. You can explain the circumstances to the Trustee, but I would suggest speaking with an attorney first and having the attorney assist you in exempting as much as you can and with the explanation. For the car, as long as you continue to make your payments on time, the debt will not affect your co-signor.
Answer Applies to: New Hampshire
Replied: 7/13/2011
The Law Office of Mark J. Markus
The Law Office of Mark J. Markus | Mark Markus
You absolutely should NOT remove your name from his bank account. You will have to list the account and hopefully you have sufficient exemptions under applicable state law to protect the amount in the account on the date your case is filed. Exemption laws are based on the state where you resided for the 2 years prior to filing your bankruptcy case or, if you lived in more than 1 state during that period, in the state where you resided for the greater part of the 180 days prior to that 2 year period. The vehicle should not be a problem as long as you stay current with the payments.
Answer Applies to: California
Replied: 7/13/2011
    Apple Law Firm PLLC
    Apple Law Firm PLLC | David Goldman
    You should discuss the specifics with your bankruptcy lawyer. There are ways to deal with this, but the results may not be what you want.
    Answer Applies to: Florida
    Replied: 7/13/2011
    Indianapolis Bankruptcy Law Office of Eric C. Lewis
    Indianapolis Bankruptcy Law Office of Eric C. Lewis | Eric Lewis
    You can't remove your name from the bank account and think that will make any difference because it will look like fraud. As for the car loan, if you continue to pay on it and don't let it go into default, even though your liability will be extinguished, you can keep paying on it AFTER the bankruptcy.
    Answer Applies to: Indiana
    Replied: 7/13/2011
    Bankruptcy Law office of Bill Rubendall
    Bankruptcy Law office of Bill Rubendall | William M. Rubendall
    When you file a chapter 7 bankruptcy the co-signer will still be obligated to pay. If you are on the friend's bank account that becomes part of the bankruptcy's assets that can be liquidated by the trustee unless they are claimed exempt.
    Answer Applies to: California
    Replied: 7/12/2011
    Ashman Law Office
    Ashman Law Office | Glen Edward Ashman
    First of all get a lawyer. This is not a pro se project. Your cosigner will be affected by the filing. The joint bank account may be taken depending on the size, and you may lose the car in which case the cosigner will be sued. Do not take this information and do a fraudulent transfer (meaning change the bank account) as that may land you in jail. Sit down with a lawyer to figure out a strategy. A reaffirmation May help, and the answer with the joint bank account depends on how big it is. Not all loans can be reassumed (or should be).
    Answer Applies to: Georgia
    Replied: 7/12/2011
    Law Office of Maureen O' Malley
    Law Office of Maureen O' Malley | Maureen O'Malley
    First, unless Ford is the creditor, you don't have to reaffirm to keep the car. You just keep paying. As long as you pay, he's ok, but should make sure it doesn't show up on his credit report, which is illegal. If there's not a lot of money in the bank account there's no problem. I do suggest you have a lawyer file for you.
    Answer Applies to: Virginia
    Replied: 7/12/2011
    Janet A. Lawson Bankruptcy Attorney
    Janet A. Lawson Bankruptcy Attorney | Janet Lawson
    Making the payments will help the co-debtor, taking your name off the bank account will do nothing for either one of you.
    Answer Applies to: California
    Replied: 7/8/2013
    The Schreiber Law Firm
    The Schreiber Law Firm | Jeffrey D. Schreiber
    As to the car, you would have to reaffirm the debt any pay it in full. However, you need to make sure you qualify to reaffirm. As to the bank account, it is a question of whether any of that money is yours or money which you have a legal or equitable right. If not, then it is not your property regardless or whose name is on the account - but if it became a question, it would have to be proven all of the money in the account belongs to a third party.
    Answer Applies to: California
    Replied: 7/12/2011
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