During your bankruptcy, you are required to report the co-debtors on any of the debt you have. In this situation, even if the you are discharged of your obligation to repay the loan, your co-borrower will still be responsible for the debt.
It's important to know that one borrower filing for bankruptcy could constitute a default on the loan. This could result in the creditor accelerating the loan and requesting full payment against the co-borrower or repossession. However, it's more likely that the lender will allow the co-borrower to remain in possession of the vehicle if timely payments are continued to be made under the current terms.
How is the primary borrower on an auto loan affected if the cosigner files for bankruptcy?
In this situation, the primary borrower is still legally obligated to pay the balance of the loan. The bankruptcy and discharge of the consignee's obligation of the loan results in the lender being able to only pursue the primary borrower if the loan goes unpaid.
Depending on your auto loan contract, you could be considered in default once the consignee's obligations are discharged. However, it's likely that the primary borrower will keep the vehicle if timely payments are continued to be made. Most lenders do not want to repossess a vehicle if the payments are kept current.
It's important to keep an eye on one's credit report if the cosigner files for bankruptcy. If the bankruptcy is listed on the primary borrower's credit report, it is considered incorrect. This can happen and it's imperative that all three credit reporting agencies are contacted to correct this issue.
Gregory J. Wald, Attorney at Law
1500 Northland Plaza
3800 American Boulevard West
Bloomington, MN 55431
Telephone: 952-921-5802
Toll Free: 1-866-747-1130
Fax: 952-831-1346
BankruptcyMinn.com
Gwald314@msn.com
It's important to know that one borrower filing for bankruptcy could constitute a default on the loan. This could result in the creditor accelerating the loan and requesting full payment against the co-borrower or repossession. However, it's more likely that the lender will allow the co-borrower to remain in possession of the vehicle if timely payments are continued to be made under the current terms.
How is the primary borrower on an auto loan affected if the cosigner files for bankruptcy?
In this situation, the primary borrower is still legally obligated to pay the balance of the loan. The bankruptcy and discharge of the consignee's obligation of the loan results in the lender being able to only pursue the primary borrower if the loan goes unpaid.
Depending on your auto loan contract, you could be considered in default once the consignee's obligations are discharged. However, it's likely that the primary borrower will keep the vehicle if timely payments are continued to be made. Most lenders do not want to repossess a vehicle if the payments are kept current.
It's important to keep an eye on one's credit report if the cosigner files for bankruptcy. If the bankruptcy is listed on the primary borrower's credit report, it is considered incorrect. This can happen and it's imperative that all three credit reporting agencies are contacted to correct this issue.
Gregory J. Wald, Attorney at Law
1500 Northland Plaza
3800 American Boulevard West
Bloomington, MN 55431
Telephone: 952-921-5802
Toll Free: 1-866-747-1130
Fax: 952-831-1346
BankruptcyMinn.com
Gwald314@msn.com
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