What happens if I file Bankruptcy (Chapter 7) and my co-signer cannot pay the deficiency? 24 Answers as of August 04, 2014

I had purchased a car with a co-signer but failed to obtain gap insurance. Shortly after the car was in an accident and totaled. After the insurance had paid out the loan there was a remaining balance I was held responsible for. I had since then gone through a debt management company to continue making payments on the loan and to keep the loan current. Presently my finances have taken a turn and I am in the process of declaring bankruptcy. What happens after I file Bankruptcy (Chapter 7) and the co-signer on the loan cannot pay the deficiency?

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Law Office of Susan G. Taylor
Law Office of Susan G. Taylor | Susan G. Taylor
The co-signer will be liable.
Answer Applies to: Texas
Replied: 8/4/2014
Stephens Gourley & Bywater | David A. Stephens
The cosigner will generally be responsible to pay the deficiency. There are a few minor exceptions for spouses and if you file chapter 13.
Answer Applies to: Nevada
Replied: 7/30/2014
The Law Office of Darren Aronow, PC
The Law Office of Darren Aronow, PC | Darren Aronow
The co signor is "joint and severally liable" so they are responsible for the full amount of the deficiency. They may also want to file chapter 7 bankruptcy.
Answer Applies to: New York
Replied: 7/30/2014
A Fresh Start
A Fresh Start | Dorothy G Bunce
If you filed bankruptcy and there is a deficiency on a co-signed loan, the co-signer will be 100% responsible to pay the deficiency...which is why creditors often require a co-signer.
Answer Applies to: Nevada
Replied: 7/30/2014
Tokarska Law Center
Tokarska Law Center | Kathryn U. Tokarska
The debt as to you can be discharged in your bankruptcy, which would make it uncollectible as to you. The co-signor remains responsible for the debt unless they file their own bankruptcy case.
Answer Applies to: California
Replied: 7/30/2014
    EDWARD P RUSSELL | EDWARD P RUSSELL
    If you file a bankruptcy and get a discharge your debt will be gone but the co-signor still owes the debt.
    Answer Applies to: Minnesota
    Replied: 7/29/2014
    Idaho Bankruptcy Law | Paul Ross
    You have no liability on the deficiency and the co-debtor cannot hold you accountable for the debt. Unfortunately, without the co-debtor filing their own bankruptcy, they are responsible for the debt.
    Answer Applies to: Idaho
    Replied: 7/29/2014
    Eranthe Law Firm
    Eranthe Law Firm | Cate Eranthe
    Usually if you don't pay (and the Bankruptcy should discharge your obligation to pay) the creditor will go after the co-signer. If the co-signor can't pay, the creditor will take all available collection actions including suing them for the money due unless they also file for bankruptcy. Or they could negotiate a settlement, or defend the lawsuit. Advise your co-signor to get legal help from a knowledgeable local attorney to see what options they have available. The law is fact specific and legal answers can't really be provided in an online forum You'll just get general information here.
    Answer Applies to: California
    Replied: 7/29/2014
    Law Office of Peter M. Lively
    Law Office of Peter M. Lively | Peter M. Lively
    The co-debtor is still liable for the deficiency.
    Answer Applies to: California
    Replied: 7/29/2014
    Janet A. Lawson Bankruptcy Attorney
    Janet A. Lawson Bankruptcy Attorney | Janet Lawson
    The co signer is stuck. They either pay or file for bankruptcy.
    Answer Applies to: California
    Replied: 7/29/2014
    Ronald K. Nims LLC | Ronald K. Nims
    When you are discharged in bankruptcy, you no longer owe the debt, regardless of whether your cosigner can pay it off. The lender can attempt to collect by suing your cosigner, garnishing his/her wages, etc. or the lender can write it off. ?In either case, the lender cannot attempt to collect from you.
    Answer Applies to: Ohio
    Replied: 7/29/2014
    Law Office of Melissa Botting | Melissa Botting
    If you file Chapter 7 Bankruptcy and the debt is discharge as to you, the lender has the right o try to collect from the co-signer. It would be up to the co-signer to work out a payment plan or file bankruptcy.
    Answer Applies to: Texas
    Replied: 7/29/2014
    Moore Taylor Law Firm, P.A.
    Moore Taylor Law Firm, P.A. | Jane Downey
    Your chapter 7 bankruptcy does not protect the co debtor.
    Answer Applies to: South Carolina
    Replied: 7/29/2014
    Law Offices of Linda Rose Fessler | Linda Fessler
    They will get sued.
    Answer Applies to: California
    Replied: 7/29/2014
    Weber & Phillips, P.A.
    Weber & Phillips, P.A. | John G. Phillips
    Whoever holds that debt will ultimately attempt to collect from the co-debtor unless the co-debtor also files a bankruptcy or voluntarily negotiates a settlement.
    Answer Applies to: Arkansas
    Replied: 7/29/2014
    Tidewater Law Group PLLC | Seth Schoenfeld
    They creditor can elect to sue and garnish the co-debtor.
    Answer Applies to: Virginia
    Replied: 7/29/2014
    Barnhart Law Office
    Barnhart Law Office | Bruce C Barnhart
    A bankruptcy will only discharge or eliminate the liability of the person filling the bankruptcy. The co-signer on the loan will remain liable on the debt. The creditor can continue collection attempts and sue the co-signer. Chapter 13 bankruptcy can be used to protect the co-signer from collection.
    Answer Applies to: Nebraska
    Replied: 7/29/2014
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