If the co-signor is someone not filing a joint bankruptcy with you, like a spouse, they should not be impacted by your filing as long as payments on the debt stay current. This includes their credit, if payments stay current after filing, there shouldn’t be a drop in your co-signors credit, even though you filed for bankruptcy.
That being said, in some situations it is a good idea to have your co-signor check with the lender on what would happen if you filed for bankruptcy and your co-signor didn’t. Not all lenders have the same policies, and then you would have a solid answer. Your attorney can help you decide if it is a good idea to check on this or not.
If your account is not current and payments are not made after your bankruptcy is filed, your co-signors credit will be impacted just as if you hadn’t filed bankruptcy. If the account isn’t current prior to filing your case, in most circumstances your co-signor’s credit is already taking a hit from the behind and missed payments.
Remember, the lender can still collect from your co-signor, they are not protected just because you filed. If your case is a chapter 13, there is something called a co-debtor stay, which can protect your co-signors.
If you have co-signors on your debt, reach out to Kain and Scott, we can help you determine what to do in your situation. Visit www.kainscott.com to speak with an attorney today. You will be glad you did!