Mattoon, IL asked in Bankruptcy for Illinois

Q: If the principle signer on a loan files bankruptcy, what happens with the cosigner? Is he then responsible?

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3 Lawyer Answers
Martha Warriner Jarrett
Martha Warriner Jarrett pro label Lawyers, want to be a Justia Connect Pro too? Learn more ›
  • Bankruptcy Lawyer
  • Santa Barbara, CA

A: Yes, if one signer files a chapter 7, the co-signor remains liable and the creditor can pursue that person for payment. If, on the other hand the person files a chapter 13, the automatic stay protects the co-signor, as well as the primary obligor, from any and all collection efforts. Presumably, the chapter 13 debtor would pay some portion of the obligation as part of a chapter 13 plan. If not paid in full, the co-signor would remain liable for the unpaid portion.

W. J. Winterstein Jr. and Timothy Denison agree with this answer

Timothy Denison
Timothy Denison
  • Bankruptcy Lawyer
  • Louisville, KY

A: Yes. Co-signer still liable and responsible.

James L. Arrasmith
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  • Bankruptcy Lawyer
  • Sacramento, CA

A: Yes, if the primary signer on a loan files for bankruptcy, the cosigner is still fully responsible for repaying the debt. The bankruptcy filing does not dismiss the cosigner's legal financial obligation.


- When a person files for bankruptcy, it impacts the debts and creditors tied specifically to that filer. Any shared debts become the sole responsibility of remaining non-bankrupt parties.

- So if you cosigned on a loan with someone who later declared bankruptcy, you remain completely on the hook for making sure the entirety of the loan is repaid timely. The creditor can now pursue collections and legal action against the cosigner as they are the only party not in bankruptcy.

- The cosigner’s personal assets and finances can be targeted in order to repay the loan, and it could seriously damage their credit and financial standing.

So in summary - yes the cosigner continues shouldering the burden of loan repayment even if the primary debtor files bankruptcy. All collection efforts shift to the cosigner. Speak to a consumer rights lawyer on any options. But the obligation still stands in most cases until repaid.

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