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Posts: 7
Registered: ‎04-26-2011
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My Cosigner is filing for bankruptcy. Reaffirmation and the loan agreement



I am the primary borrower on an auto-loan which was cosigned by someone else. In what is the reverse of the usual, the cosigner is filling for bankruptcy. I've been doing research and most people seem to say as long someone (me) continues to make timely payments, this should not affect me negatively. However, after reviewing the terms of my loan agreement, I found one line that is of concern. It states "You will be in default if die, file for bankrupcy, become insolvent...". I'm no lawyer, but this seems that if either borrower files for bankruptcy, the loan will be in default and then can demand immediate payment of the loan. If the cosigner were to sign an reaffirmation agreement, would the credit union (from where my loan is sourced) still be able to demand immediate payment?


Thank you in advance for your input.

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Posts: 3,406
Registered: ‎12-19-2012
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Re: My Cosigner is filing for bankruptcy. Reaffirmation and the loan agreement

I am not sure if it will affect your credit report negatively or not. If it was a joint account, I would think that the filing of bankruptcy of one person would affect the other but I am not sure about consigning. I would call the auto loan company and ask just to be sure as it could also be a factor of differing policies. I believe they would definitely come after you next if you weren't planning to make payments since you are fair game. You would only need to reaffirm if the account on your credit report ended up included in BK. Honestly, I think life will go on as usual as you are primary person required to make payments. Just realize that if you default and can't pay, the loan company will not go after the cosigner because they won't be able to legally so all the negativity of failure to pay would fall in your would be as if you purchased the car on your own without a cosigner.
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