Cosigning a loan links you and your cosignor together for the life of the debt.
If you get in financial trouble, your troubles are your co signor’s troubles too.
If you can’t pay your debts, the standard bankruptcy discharge will get rid of your debt, but it doesn’t help your co signor.
Even while you are protected in bankruptcy by the automatic stay, keeping collectors at bay, and by the discharge at the end of the case, anyone who cosigned for you is exposed.
But Chapter 13 isn’t the “standard” bankruptcy. It has a special protection for people whose debts are co signed.
Automatic stay covers co signors
Unique to Chapter 13, Section 1301 of the Bankruptcy Code extends the protection of the automatic stay to those who are jointly liable with the debtor on consumer debts. [Read more…]