{"id":1740,"date":"2019-07-09T14:54:49","date_gmt":"2019-07-09T14:54:49","guid":{"rendered":"https:\/\/recoverylawgroup.com\/?p=1740"},"modified":"2025-08-21T11:23:57","modified_gmt":"2025-08-21T11:23:57","slug":"my-cosigner-filed-for-bankruptcy-does-it-impact-me","status":"publish","type":"post","link":"https:\/\/recoverylawgroup.com\/staging_D\/my-cosigner-filed-for-bankruptcy-does-it-impact-me\/","title":{"rendered":"My Cosigner Filed for Bankruptcy; Does it Impact Me?"},"content":{"rendered":"

In many different places, getting loans or line of credit is not easy. There is always a requirement of a guarantor or a cosigner. Parents, relatives, spouse, or friends could play as guarantor\/cosigner. How does the bankruptcy of one cosigner impact the other person? This is what we will discuss in detail here. For best and quick solution on bankruptcy related issues, just hop to Recovery Law Group<\/a>.<\/p>\n

Cosigner and the relationship<\/strong><\/p>\n

A Cosigner is a person who is liable to pay the loan in case the primary borrower defaults. The Cosigner is the backup plan for the financial institution to recover its debt. The cosigner could be a known or unknown person who agrees to do so. Cosigners are common for people with short or no loan or credit history. People with bad credit score, lower income, no assets to pledge as collateral, etc., usually require a cosigner for swift loan approvals. California, Texas, New York, Los Angeles, etc., are some states where you would typically see the use of cosigners a lot. However, as a cosigner one can be held liable in case of defaults, bankruptcy and other scenarios. Hence, one should be very cautious when opting for the role of a cosigner.<\/p>\n

Impact of bankruptcy declaration<\/strong><\/p>\n

The unsecured debts which are usually the case with the debts associated with cosigner get released when bankruptcy is filed. The obligation for the primary debtor to pay off the debts is released. This is true for all types of unsecured debts. This release of obligation, however, does not apply to the cosigner and he\/she still remains liable to the debt not paid by primary borrower due to bankruptcy. The primary borrower may declare bankruptcy through Chapter 7 or Chapter 13. In the case of Chapter 7 bankruptcy<\/a> declaration, the primary borrower gets an \u2018automatic stay\u2019, which evades the borrower from all unsecured creditors. However, this benefit does not shield the cosigner. This means the risk and liability will shift to the co-borrower or cosigner completely.<\/p>\n

How to protect your cosigner?<\/strong><\/p>\n

There are ways to protect the cosigner. The primary borrower is the primary link for the bank or any other financial institution. Hence, the cosigner would not know if any payment due has been missed or not been paid. Keeping the cosigner informed in advance can help in keeping the loan current and reducing the number of payment defaults. If you are the cosigner, it is a good practice to keep a check on the payments on every due date. Any payments missed will directly impact on the credit history, score and various other parameters for both the parties involved in the transaction.<\/p>\n