Co-Debtor Question

[bkchap7filer]

I am single, but am listed as co-debtor on two secured loans. One is for a boat and one is for a car. Both of these vehicles have negative equity. I am likely listed "first" on these loans as I used to have the better credit. In any event, I do not plan to reaffirm on these two loans as the co-debtor is fine with just taking them on and continuing the payment. This is a significant other that I live with, but am not married to. I talked to my attorney about this earlier and was advised that everything would be fine with me not reaffirming and the co-debtor continuing the payments. By "fine" I meant that the lender wouldn't have any interest or right to try to come and take them as the payments are completely current and have never been late.

I even called the creditors personally and asked them what would happen if I filed and didn't reaffirm and the co-debtor continued the payments and they confirmed that everything would flow smoothly for the other person to continue to pay the debt. But....I am still worried as I near my 341 meeting....just nervous energy, I think.

What is adding to my worry is that we also had a joint unsecured debt account at a furniture/electronics store. When I called that company pre-filing, they told me the same thing about the other person continuing to pay the debt and everything flowing smoothly. WELL, I now find out that they closed the account (wasn't even a day behind on payments) and will list it on the other person's credit as zero balance due to bankruptcy even though the other person is 100% willing to keep paying. They said that they do not offer reaffirmations on their unsecured debt and that they are sorry I was told wrong by them when I called pre-filing, but that is the way it is.

So, I can't imagine that a creditor would want property instead of money (they are not a property holding company!), but the unsecured debt situation above has me now nervous about the secured loans of the car and boat. All my significant other wants to do is keep the payments current and keep the property.....do you see any issues???

[woeisme]

No problem. You are right, no one wants property over money, money wins every time. Have your co-debtor write a response to be posted in their credit history that the BK is not theirs, but the co-signer on the debt, and when the debt continues to be shown as paid on time as agreed it shouldn't ding their ability to get credit too much (although with this credit market everyone's credit-obtaining ability is dropping!) Once the debt is paid for by the co-debtor, have them request that it refect "paid in full as agreed" and petition to have the BK status completely removed. They closed the account so that you don't have access to it anymore, being that you are filing BK. They probably considered that flowing smoothly from their side of the table. They will go after the co-debtor if they don't pay the debt, but as long as they keep paying as scheduled they should be able to get the ding off their credit report or to at least explain the reporting if they are looking to obtain credit.