Cosigner Liability in Chapter 7 Bankruptcy





Chapter 7 bankruptcy does not erase cosigner liability. Cosigners may still have to pay your debt. Chapter 7 bankruptcy attorneys near Plano, Texas can explain.

Filing for Chapter 7 bankruptcy does not automatically erase your debts. It removes you from liability, but it does not necessarily remove your cosigners' liability on your loans. A cosigner is still fully liable for paying off your loan, even if you file for bankruptcy. Chapter 7 bankruptcy attorneys near Plano, Texas explain the laws and what you can do to protect your cosigners.

Role of Cosigner

In order for you to be approved for a loan, a creditor may require a cosigner. A cosigner is someone who can take responsibility for the debt should you become unable to pay it. Some creditors may require a cosigner for those who have no credit history, such as college students, or for those who have a weak credit score. A cosigner typically is someone with a higher income or credit score, such as a spouse, parent, or other family member.

How Chapter 7 Bankruptcy Affects the Cosigner

When you file for Chapter 7 bankruptcy, creditors can longer harass you for payment. However, cosigner liability may be an issue. Because your cosigners are not who filed for bankruptcy, creditors can pursue them and ask for payment.

Sometimes creditors will try to collect on the debt years after Chapter 7 bankruptcy has been filed and will try to sue cosigners if they no longer can contact the debtor. Creditors have the right to do this as long as the statute of limitations has not run out. The time limits vary from state to state. Chapter 7 bankruptcy attorneys near Plano, Texas, can tell you the statute of limitations is four years, meaning that creditors have up to four years after you last made a payment or charge to the account to collect the debt from a cosigner.

However, even if the statute of limitations has expired, the creditor still can harass the cosigner about liability. The cosigner will not have to repay the debt legally, but he or she may feel the need to do so on moral grounds.

Protecting Your Cosigners

There are a couple of ways you can stop creditors from harassing your cosigners for debt. You can reaffirm the debt, which means you stop the discharge of the debt and take responsibility for it. You will become personally liable for it, which means you will need to pay it off. Along the same lines, you can stop the discharge and continue to make payments so that the debt is paid off and the creditors no longer harass your cosigners. These two options eliminate cosigner liability and will require you to take responsibility for the debt.

Contacting Chapter 7 Bankruptcy Attorneys Near Plano, Texas

The procedures and laws surrounding Chapter 7 bankruptcy can be confusing. Protect your cosigners by getting legal help right away.

ABOUT THE AUTHOR: Warren & Migliaccio, LLP
Serving Texas families with help in their legal matters is the goal at Warren & Migliaccio, LLP. We understand that there are numerous times when you and your family may need a Dallas, TX attorney and our team focuses on 2 main areas of law: divorce and bankruptcy.

It may seem like a strange pairing, but Attorney Christopher Migliaccio found his calling when he saw how much relief and happiness a successful bankruptcy resolution could bring to a family. Likewise, Attorney Gary Warren finds the same satisfaction knowing divorced families can move on to new lives after an amicable resolution.

Our Texas divorce lawyers want to help uphold our clientsí rights to their share of marital property, child custody, alimony, and divorce child support. During the process, itís not just a focus on settlements, itís a focus on doing whatís best for our clientsí family and long-term happiness.

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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.



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