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Bankruptcy and a co signer

amieric88
Established Member

Bankruptcy and a co signer

Hi there
I have a family member who co-signed a car with me to help me build my credit. However, they have run into a hardship and medical bills have left her owing a lot of money after insurance took care of their part. Here's my question - if they file for BK and I'm joint owner of the vehicle how does this effect me and my credit and ownership to the car? Will they take the car away from me? What's the deal? What do I have to expect. My credit hasn't built up enough to probably purchase one on my own (that isn't a piece of S from a buy-here-pay here). Thoughts? I'm a little worried.
Message 1 of 5
4 REPLIES 4
dabrian
Frequent Contributor

Re: Bankruptcy and a co signer

Are they keeping the payments current?

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Message 2 of 5
amieric88
Established Member

Re: Bankruptcy and a co signer

Yeah - its my car that I pay for myself, they just helped me obtain it credit wise. But it's current and up to date; in fact I made a payment this morning.
Message 3 of 5
pizzadude
Super Contributor

Re: Bankruptcy and a co signer

I would check the loan agreement because it is possible that the loan would be considered in default if they file BK even if the payments are up to date.
March2010 FICO® ~ 695 TU, 653 EQ, 697 EX
Message 4 of 5
shols44
Frequent Contributor

Re: Bankruptcy and a co signer

The loan will be considered in defualt if they file. It will report to your CRs as a major derog! 

 

I would see if the lender is willing to release them from financial responsibility and see if you can become the sole account holder. YMMV here. May lenders are reluctant to do this but you can make a case especially considering you have kept payments.

 

If all else fails, refi the loan and remove them. If you cant refi, I would find a way to buy out the loan either via cash or credit. Either way, be proactive about this and spare yourself the agony of having a BKd account report. 


Starting Score: 501
Current Score: 754 EQ,TU 745,EX 750
Goal Score: 800

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