When you face bankruptcy, some of the debts you’re struggling with may involve cosigners on loans. These could range from student loans to auto loans.
In some cases, your debts may also involve a guarantor: someone who took on the responsibility of paying a debt in a situation where you’re unable to.
When you file for bankruptcy, your creditors may be able to go after your cosigners or guarantors.
Cosigner and guarantor protection
To give you an example of how serious this kind of situation can get, CNN recently published an article on parents hit with student loan debts of children who passed away. In one case, parents of a young woman who had passed away found themselves struggling with a rapidly ballooning student loan debt that included late fees and a high interest rate; the loans had come from private lenders to help her pay for nursing school.
The article emphasizes how the cosigner to a student loan, for example, is considered fair game to creditors. So if you’re filing for bankruptcy, what can you do to help protect your cosigners or guarantors?
For starters, it’s important to look at your bankruptcy options. Chapter 7 bankruptcy might provide you with an automatic stay to hold off creditors, but this automatic stay likely doesn’t include your cosigners or guarantors.
Chapter 13 bankruptcy may offer more protection to cosigners and guarantors, who can have the automatic stay apply to them under these circumstances. This is because Chapter 13 bankruptcy involves a repayment plan; you’re expected to pay back your debts, at least in part. However, Chapter 13 bankruptcy doesn’t by any means offer 100% protection. For example, if your repayment plan doesn’t include all of your debts, your creditors may still seek to go after cosigners and guarantors.
As an Ohio resident, you really need to contact an experienced Dayton
, Ohio bankruptcy attorney for further guidance and legal advocacy. Your attorney can work with you, and your cosigners and guarantors, on the best solution possible for your circumstances.