What happens to my co-signed debts when filing for Chapter 7 Bankruptcy?

When filing for Chapter 7 Bankruptcy in California, it is important to understand how co-signed debts are affected. Co-signed debts are debts that are legally shared between two parties, meaning that both parties are responsible for paying the debt. When filing for Chapter 7 bankruptcy, co-signed debts can be discharged from the bankruptcy. This means that the bankrupt party no longer has any legal liability for the debt, leaving the other cosigner solely responsible for the debt. However, the other cosigner may be able to file a motion with the court to have the debt discharged as well. It is important to note that even if the co-signed debt is discharged in the bankruptcy, the other cosigner may still be pursued by the creditor for payment. The creditor may attempt to collect the debt as long as it is within the legal time limit. If the other cosigner refuses to pay the debt, the creditor may take them to court and obtain a judgment to garnish their wages or freeze their bank accounts. Therefore, when filing for Chapter 7 Bankruptcy in California, it is important to understand the implications for co-signed debts. While the bankrupt party has legal responsibility discharged, the other cosigner may still be liable for the debt. If the other cosigner is not willing or able to pay the debt, the creditor may seek to collect it from them.

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What happens to my co-signed debts when filing for Chapter 7 Bankruptcy?

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