Q: I am thinking about filing for a bankruptcy, but have co-signed for a relative on a vehicle.
What problems will this cause my relative if I file.
A: It shouldn't cause a problem unless the purchase papers have some type of clause that triggers something when the co-signor files bankruptcy. You and the purchaser should review the purchase documents that you co-signed. I would be surprised if there was anything but since I can't assume there isn't I have to advise you to review the documents. Essentially your bankruptcy only releases you from debts you have contracted to pay. So the effect will be that you will no longer be liable as a co-signer. The purchaser of the car is still liable and I would expect that if the purchaser keeps making all the payments on time the creditor will be happy. The creditor still has a security interest in the vehicle. All that has changes is the creditor no longer has a co-signor to go after. (You will need to list the loan you co-signed on in your bankruptcy and the creditor will be notified.)
A: As long as the relative is making the payments it won't have any affect on them. You will no longer be obligated on the vehicle and they will just have to make sure and stay current on the payments.
A: None so long as your relative keeps making the payment. You’ll no longer be responsible for the debt and your relative will be solely responsible for the debt.
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