How does Ch. 7 affect cosigners?

[Ms.Santos]

How does Ch. 7 bankruptcy affect cosigners? I imagine it would just make them responsible for the loan that they cosigned on, but would it put a bad mark on their credit?

I am thinking about filing, but my sister is the primary name on the loan for a car that was totaled by my husband. I was technically the cosigner, and she was the borrower... the car was mine and I made the payments. Auto insurance and GAP insurance paid most of it, but there is quite a balance left, and the payments will put me over the edge. I am terrified of ruining my sister's great credit score if I file. What will happen if I do this? If this just means she's responsible for the payments, I will just continue to make the payments to her, since I can have all my other debts liquidated. I just want to make sure I'm the one with the bad mark on my credit report, and not her.

Please advise... thanks!

[JRScott]

If you file bankruptcy then your sister would be responsible to make the payments and could be sought after even if you surrender the vehicle for the difference between the amount you owe and the amount they raise from selling it.

[Boscoe]

Unfortunately, that is one of the risks cosignors sign up for when they agree to do this, and why alot of people won't do it, even for family members.

She has a choice, either make sure it gets paid, or have it hurt her credit score. That is why I recommend that you continue to pay the loan and keep it current - that and the fact that you NEED a car, especially with a young child.

[Ms.Santos]

I actually no longer have the car... my husband wrecked it in March. That is my problem. I still NEED a car.