At times, more than a person can apply for a loan. When this happens, all parties are responsible for the debt. The account thus appears on the credit report of co-signees. One of the major concern people have in this case is if one of the debtor files for bankruptcy under Chapter 13, would it reflect on the other person’s credit report? Dallas based bankruptcy law firm Recovery Law Group lawyers elaborate that bankruptcy involves two components which can appear on the credit report – court record and individual account status.
The credit records of a person who files for bankruptcy reflect the bankruptcy status. Since repayment is involved in the case of Chapter 13 bankruptcy, it remains on your credit report for a period of seven years from the date of filing. Every account that is included in bankruptcy shows its status on the credit report, showing whether it is “current,” “45 days late” or “current, was 45 days late.” Almost all accounts in bankruptcy display the status “account included in bankruptcy.” However, it is important to remember that this appears in the credit report of the person who has declared for bankruptcy and not in the loan co-signer’s report if they haven’t declared bankruptcy.
The status of co-signer’s accounts (whose partner has filed for bankruptcy) will report the lender’s obligations at the time bankruptcy was filed. Without any reference to bankruptcy, the status is reported as delinquent or charged-off depending on the actual status of the accounts. In case an agreement is reached between the lender and the debtor and the account is closed, it is mentioned so in your credit history too. It is important to contact the lender to know more about the obligations on your account and how it can be closed and reported so in your credit history. Having a lawyer at such times is an asset. In case you need a consultation, you can call 888-297-6023.