Will my cosigner be affected thru all this even if I'm choosing to keep the new car? 10 Answers as of September 09, 2016

I'm about to file for bankruptcy and surrender my car because of the amount I owe on it is not worth the car. I need to have a car for personal reasons because I have to pick my child up every other weekend. I'm thinking about getting one before filing bankruptcy and just reaffirm the new car. I'm really trying to figure this out before I do it. I don't want my cosigner's credit to be affected.

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Robert Louque | Robert Louque
If you file a Chapter 7 and surrender a vehicle that has a co signer, the co signer will absolutely be affected. They will be called upon to pay any amounts left over after the car is sold at auction. Incurring debt just before you file bankruptcy is also a terrible idea. While it may not be improper in your particular case, it could potentially bring attention you do not want to your bankruptcy case. I am not an expert on credit reporting issues but I believe any account you have with a co signer will have a notation that the debt was part of a bankruptcy filing. I am not sure if that affects the co signer's credit score.
Answer Applies to: Louisiana
Replied: 9/9/2016
Eranthe Law Firm
Eranthe Law Firm | Cate Eranthe
Your question is not clear. If you have a co-signer on the car loan and surrender the car, the co-signer will be liable for any deficiencies. If you have a co-signer, reaffirm the the loan and make the payments then there is no impact on the co-signer.
Answer Applies to: California
Replied: 9/8/2016
Janet A. Lawson Bankruptcy Attorney
Janet A. Lawson Bankruptcy Attorney | Janet Lawson
It should not affect his/her credit.
Answer Applies to: California
Replied: 9/8/2016
Stephens Gourley & Bywater | David A. Stephens
Your cosigner will be affected because even though you discharge that debt in bankruptcy, the cosigner will still owe the balance of the debt.
Answer Applies to: Nevada
Replied: 9/8/2016
GARCIA & GONZALES, P.C. | Richard N. Gonzales
The reason the lender asks for a cosigner is in case you don't pay, for whatever reason (including filing BK). The lender will go after the cosigner.
Answer Applies to: Colorado
Replied: 9/8/2016
    A Fresh Start
    A Fresh Start | Dorothy G Bunce
    If you did not have a co-signer, I could offer you plenty of advice about ways to keep the car for its current value rather than what you owe on it. Because of the co-signer, you need to understand that your bankruptcy discharge will put the responsibility to pay this loan entirely on the co-signer. Returning the car will destroy the co-signers credit and will result in him/her being subject to a lawsuit for the difference in what you owe and what the car sold for when the car was auctioned.
    Answer Applies to: Nevada
    Replied: 9/8/2016
    Garner Law Office
    Garner Law Office | Daniel Garner
    Your co-signer's credit will be affected if you do not reaffirm the car loan, because the creditor will pursue them for any deficiency after they auction it off.
    Answer Applies to: Oregon
    Replied: 9/8/2016
    Richard B. Jacobson & Associates, LLC | Richard B. Jacobson
    It's certainly good of you to want to protect your co-signer. But if you reaffirm on the car loan, you become responsible for the total amount still due on the car, and the debt is not discharged in BR. This may be a big favor to do a friend. There are various alternatives you might consider, such as surrendering the car and if the lender goes after your friend, then reimbursing him or her. Another, probably more economical course, would be to cut some extra money into repairing your present car. It will likely cost less than a reaffirmation, and you'll have a more reliable car to drive for at least a few years.
    Answer Applies to: Wisconsin
    Replied: 9/8/2016
    YES - the cosigner will NOT have the protection of the automatic stay that you will and the creditor CAN seek the deficiency from the cosigner.
    Answer Applies to: South Carolina
    Replied: 9/8/2016
    Ronald K. Nims LLC | Ronald K. Nims
    As long as you pay on the car, your cosigner will not be affected.
    Answer Applies to: Ohio
    Replied: 9/8/2016
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