How does filing Chapter 13 Bankruptcy affect my co-signers?

Filing Chapter 13 Bankruptcy in California can have an effect on your co-signers. When a party files for Chapter 13 Bankruptcy, their debt is reorganized and they are given a repayment plan to payback their creditors. This plan requires the debtor to make payments to their creditors. If the debtor is unable to make the payments, their co-signers may be held responsible for the debt. The Bankruptcy Code protects co-signers in some ways. If a debtor is unable to make payments in their repayment plan, their co-signers may be allowed to make payments on the debt in place of the debtor, allowing them to remain current on the debt. This protects the co-signers from any negative affects the debt may have had on their credit score. In addition, under certain circumstances, the Bankruptcy Court may be able to discharge a co-signer’s liability on the debt if it is determined that the co-signer’s sole purpose for signing the loan was to guarantee the original debt. When a party decides to file for Chapter 13 Bankruptcy in California, they should understand how it will affect their co-signers. While the Bankruptcy Code offers some protection, it is ultimately up to the debtor to make sure their co-signers are taken care of throughout the process.

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How does filing Chapter 13 Bankruptcy affect my co-signers?

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