Possible BK and mortgage reporting

[Patriot fan]

Hello-

I am in need of some guidance. A few years ago, my wife and I refinanced my father in laws house in an effort to help him financially. Due to several issues, he was unable to afford his home anymore. He was the primary borrower due to his occupancy of the home, and my wife and I are the non occupant cosignors. We make all payments. (I work for the lender we did the loan through, but am not comfortable bringing up this issue to the servicing supervisor here). My father in law has racked up in the neighborhood of 50k in credit card debt. He has never had a late payment, but we know he is getting to the point of not being able to afford his minimum payments.

My question is simply this-if he does file BK, how would that effect our credit? We currently have FICOS close to 800. If it ruins his credit-fine, but in no way do I want it to effect ours.

I appreciate any input and advice.

[Flamingo]

Anytime you cosign for someone, you are taking on a risk. In the usual situation with co-signing a loan, if the person mainly responsible for the debt cannot pay, you would be stuck paying; but in your situation, you are already paying the payments. If he files bankruptcy, since his name is on the mortgage, he will have to list the debt and with you making those payments there could be an issue. Also, if he did file, it could show up on your credit reports since you are co-signers (another risk of co-signing). I suggest maybe looking into selling the house to pay off your father-in-law's debts and see about getting him an apartment since he cannot afford to live in the home anymore and probably not any of the repairs. In any event, consult an attorney and go over the entire situation.