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

When filing for Chapter 7 Bankruptcy in South Dakota, co-signed debts are not automatically discharged. That means you still owe the loan, even after filing for bankruptcy protection. However, the creditor can no longer demand that you, the co-signer, pay the loan. Additionally, the creditor cannot seek legal or collection actions against you. In some cases, the creditor may try to have you declared as a “co-debtor” on the loan. If this happens, then you are legally responsible for the entire balance of the loan. If you want to avoid this, you can file an Adversary Proceeding, which is a lawsuit in bankruptcy court, to have yourself removed as a co-debtor. If the creditor does not try to have you declared as a co-debtor, and you have not co-signed on any new loans, then you should be able to completely discharge your responsibility as a co-signer when the Chapter 7 Bankruptcy is discharged. The creditor may still try to collect from the original borrower but cannot take legal or collection action against you. Ultimately, it is important that you speak with a knowledgeable bankruptcy attorney prior to filing for Chapter 7 Bankruptcy if you have co-signed on any loans. An experienced lawyer can help you understand your rights and responsibilities and can assist you with any Adversary Proceedings that may be necessary.

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

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