Can I file for bankruptcy if I have a co-signer?
We know that there a number of reasons you might be considering bankruptcy. We also know that often times there are just as many reasons that you might be hesitant to file for bankruptcy. While bankruptcy may be a helpful financial tool for some, it might not be in the best interest of everyone. Our goal is to give you the best and most accurate individual advice for your particular situation. In order to do that, we have to make sure that you understand what bankruptcy can do and what it cannot, as well as to dispel many of the common myths and misunderstandings of bankruptcy.
We have a lot of clients that have joint ownership interests in property with other people and they are often concerned about the impact on the other people. This can be a somewhat complicated issues, and if you have questions about this please come in and talk to us, as this is only meant to be a general explanation and cannot substitute for legal advice.
One common example we see is that an individual has a jointly owned vehicle or a co-signer on a vehicle. First, filing for bankruptcy with not impact the joint owner or co-signers credit. It also doesn’t impact their ownership interest. In the example of a joint owner the other person still owns whatever percentage of the property he/she initially owned. If you want to surrender the vehicle it may create some issues. Your responsibility for the vehicle will be absolved in the bankruptcy, however, just like the bankruptcy doesn’t impact your co-signer’s credit it also does not impact their financial responsibility. On the other hand, if you wish to keep the vehicle, perhaps through a reaffirmation agreement, your co-signer or joint owner should not be impacted.
We also see situations where parties own a house together. In some instances the value of the property is more than we can protect in the bankruptcy. So, for example, Sibling A, Sibling B, and Sibling C own a house together that is paid off and worth 90,000 dollars. Sibling A files for bankruptcy and we can only protect 10,000 dollars of equity, leaving 20,000 dollars unprotected. The trustee will likely want that money. Sibling B and C still own their share, however, the trustee will end up owning a portion too and may be able to force a sale to recover the money owed. Of course, Sibling B and C would be paid their share, but that may not be what they want. There are options, including that Sibling B and C could pay the trustee without selling the house.
As you can see, this can be very simple and can also be quite complicated. If you have questions about this please contact your St. Louis Bankruptcy Attorney today!