What happens if my Minnesota cosigner files for bankruptcy?
In this situation, it’s important that you reach out for help as soon as possible, whether you’re the cosigner or the primary borrower.
Cosigners are generally financially responsible individuals with a solid credit history and the financial means to offer their support to a friend or loved one. However, in today’s uncertain world, where an unexpected job loss or medical expense can suddenly occur, cosigners may sometimes need to take advantage of the benefits that bankruptcy can offer.
However, as the primary borrower, this can put you in a difficult situation. After all, it was probably the case that you were able to achieve the borrowing rates you received, or even approval for the loan, because of the assistance that this relationship provided.
Depending on your arrangement prior to the filing, you may have an easier or more difficult time dealing with your cosigner’s bankruptcy. For instance, if you’re able to meet the full cost of the monthly payment on the financial extension, or had already been doing so, the filing will not affect your credit rating or the terms on the loan.
On the other hand, if you’re not able to meet your payment obligations, problems could quickly arise. With missed payments, your credit score could suffer greatly, and if the loan falls into arrears, it’s possible that the asset you secured the borrowing for could be repossessed provided you don’t seek financial protection of your own.
If the cosigner seeks protection first, the value of this asset could then be accounted for in the estate of that bankruptcy by the court-appointed trustee for the case, meaning you may not be able to see any benefit from the asset in your own filing.
In this situation, it’s important that you reach out for help as soon as possible, whether you’re the cosigner or the primary borrower. By doing so, the representatives at an experienced Twin Cities bankruptcy law firm can assist you with the difficult choices that will follow and ensure you both make the best decision for your financial future.