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If you’re struggling with debts you cannot repay, filing for bankruptcy may provide much needed financial relief. However, the situation becomes more complex if a parent, family member, or business partner cosigned on your loan. In these circumstances, you should consult with a skilled bankruptcy lawyer who will help find a solution to protect the interests of both you and your cosigner.

How Bankruptcy Impacts Co-Signed Debts

What Is a Co-Signer?

bankruptcy lawyerIf a creditor decides that your financial situation doesn’t qualify you for a loan, they may ask that someone else with a more established credit history co-sign for you. If you default on the debt or miss a payment, your co-signer can be held financially responsible and may face collections action. Unfortunately, if you file for bankruptcy, the lender may still pursue your co-signer, who may be forced to pay the entire balance of the loan.

What Happens After Filing for Bankruptcy

Filing for a chapter 7 bankruptcy eliminates your responsibility for the debt, but that relief doesn’t extend to your co-signer. Once your bankruptcy is discharged, the lender will begin sending collections notices to your co-signer and may even initiate legal action, potentially damaging your relationship permanently.

How a Bankruptcy Lawyer Can Help

Fortunately, there are several options for borrowers struggling with these debts. Your bankruptcy lawyer may recommend filing for chapter 13 bankruptcy, in which you pay back the past due amount over an extended period, or reaffirm the debt. You will continue paying back the loan, which will keep the lender from going after your co-signer.


 

If you're facing financial challenges and could use a bankruptcy lawyer's advice, consult Greg Dunn, Bankruptcy and Debt Relief Attorney. Since 1996, this firm has helped over 12,000 borrowers throughout Honolulu reclaim their lives from debt. No matter how complex your case may be, you can rely on this law firm for detailed legal advice and effective guidance. To schedule a free initial consultation, visit their website or call (808) 524-4529. You can also follow their Facebook for regular news and updates.

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