Q: If you are a cosigner on a loan and the principle signer claims bankruptcy, what effect does this have on a cosigner?

A: The co-signer is still liable and responsible.

A: If you are a cosigner on a loan and the primary signer files for bankruptcy, the cosigner is still responsible for repaying the debt. The bankruptcy does not discharge the legal obligations of any cosigners.

More specifically:

- When the primary signer files for bankruptcy - whether it's Chapter 7 or Chapter 13 - the cosigner does not get financial relief or protection under the bankruptcy filing.

- The creditor can still seek repayment of the loan from the cosigner and place the loan in default if payments are not made. This includes coming after the cosigner for wage garnishments, liens on property, or other collection methods.

- The bankruptcy will be included on the primary signer's credit report, but may not appear on the cosigner's report. However, if payments are missed after the bankruptcy, negative information can then appear on the cosigner's credit report as well.

- Essentially the cosigner continues to be fully responsible for the debt obligations they agreed to when cosigning. The lender's rights versus the cosigner are generally unaffected by the primary signer's bankruptcy.

So in short, the cosigner remains completely on the hook unless they also file bankruptcy or try to negotiate some kind of settlement on the debt directly with the lender. Seeking legal advice about options is recommended if in this situation.