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Cosigner is going to claim personal bankruptcy
Anonymous10 views4 answers
What happens when a cosigner on a car loan files personal bankruptcy, and my credit score and income is not what it was when I/we qualified
for the car loan, even though the payments are current will they try to repossess the car with him claiming bankruptcy
As long as payments are current they cannot repossess the car, even with the bankruptcy.
The response does not form an attorney-client relationship, nor is it intended to be anything other than the educated opinion of the author. It should not be relied upon as legal advice. The response given is based upon the limited facts provided by the person asking the question. To the extent additional or different facts exist, the response might possibly change. Attorney is licensed to practice law only in the State of California. Responses are based solely on California law unless stated otherwise
While the terms of your contract may define default as the filing of bankruptcy by any of the signers to the contract, it is doubtful that (if the lender/lessor keeps receiving timely payments from you) they will repossess the vehicle and have to deal with selling it and then trying to collect a deficiency from you only (since the other party has filed bankruptcy). Be sure that your address with the lender is current, so you are notified of whatever happens regarding the account status.
The bankruptcy of a co-signer should not impact your credit reports or score. The fact that your income was accurate when you signed the application and has gone down since then does not change anything, other than your ability to pay a settlement or a judgment if you stop making payments on the car contract and they file suit.
As for your income and credit scores dropping since a few years ago, all anyone can say here in Southern California is, "Join the club."
Generally, if the loan is current, the lender will not reposses the vehicle. Often, the lender may require the cosigner who filed for bankruptcy to sign a reaffirmation agreement stating the the cosigner agrees that he or she will remain personally liable for the loan if it goes into default. One caveat, however, is if the cosigner files for Chapter 13 and does not provide for payment of the debt in his or her plan, the lender may seek to modify the co-debtor stay to seek possession of the vehicle.
