Q: If I have a loan on a car with my wife and we split up and she files Bankruptcy and I dont what happens?
so If we are co signed on a car and my wife files Bankruptcy and I don't what happens? Say my credit isn't very good will my payments go up and can she get off the loan this way?
It depends on whether she files Chapter 7 or Chapter 13.
If she receives a Chapter 7 discharge, she will get off the loan. She will no longer be personally responsible to pay the debt, but as co-signer, you will remain responsible. She can continue to make the payments, if she wants to, but if she doesn't and you don't, the creditor can repossess the car, sell it at auction, and sue you for the balance. Your credit rating should not be affected by her bankruptcy filing, but it will be affected if the payments are not made.
If she files a Chapter 13, and wants to keep the car, you can pay the car loan through the bankruptcy, and, if the car is worth less than what is owed to the bank, you can reduce the amount that you have to pay for the car. At the end of the bankruptcy case, you can own the car free and clear.
Harlene Miller agrees with this answer
A: Since you both signed the car loan, the bankruptcy stay will prevent the creditors from suing her. However, as a co-signor, you would be liable for the entire loan. Best of luck.
In a Chapter 7 - As a non-filing co-debtor on a car, you are left with the legal responsibility for the car, unless your wife reaffirms the debt. Reaffirming a debt is signing a promise to the lender, that she will continue to be legally responsible for the car as well as you.
In a Chapter 13 - There is no reaffirmation, but as long as you have owned the car for 2-1/2 years, if could be crammed down to it's actual value and she could pay for it through the bankruptcy. Or she could surrender the car and you would be the only responsible person on the loan.
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