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If we have a co signer on a new car contract why do they…

If we have a co...
If we have a co signer on a new car contract why do they have to be included in a chapter 13 bankruptcy ?CS1
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Answered in 6 minutes by:
1/29/2017
TJ, Esq.
TJ, Esq., Attorney
Category: Bankruptcy Law
Satisfied Customers: 12,810
Experience: JD, MBA
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Hello and thank you for the opportunity to assist you. My name is ***** ***** I'll be glad to help if I can. However, I think I may be missing some facts here. Can you provide a little background information and perhaps clarify the question? Thank you.

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Customer reply replied 1 year ago
Sure were considering filing a chapter 13 bk and we have a car we just bought but we got a relative to co sign to get better interest rate and less down payment - First do we have to include the car in the bk and if we do what happens to the co sign credit ?CS1

Hello again.

Q: First do we have to include the car in the bk

A: Every debt and every asset must be listed in your BK schedules. Accordingly, you would need to list the car loan, and you would need to list the car.

Q: and if we do what happens to the co sign credit ?

A: Are you asking if the co-signer's credit is affected by you filing for BK? If so, then the answer is no. The co-signer's credit is not affected at all.

Does that answer your question(s)? Please let me know if you need clarification, as I am happy to continue helping you until you are satisfied. Also, please remember to provide a positive rating via the stars (and note that your positive rating is the only way that I'll get credit for helping you, so it is much appreciated!). Thank you. :)

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Customer reply replied 1 year ago
Thank you - Lastly in the BK were going to keep the car so what possibly happens with finance charges and monthly payment ?Is the interest waived or payment negotiated to be less and if the answer is yes will that effect the co signor credit then ?CS

Hi again.

Q: what possibly happens with finance charges and monthly payment ?

A: In most cases, the finance charges and monthly payment stay the same, and must be paid or the car will be repossessed. However, see below ...

Q: Is the interest waived or payment negotiated to be less and if the answer is yes will that effect the co signor credit then ?

A: No, interest is not waived. But it is possible that the car loan balance could be lowered (and thus, the payment lowered) if the car is worth less than what is currently owed. This is called a cramdown. Basically, in the Chapter 13, you can cram down the loan so that it is equal to the value of the car. Accordingly, your payments may be adjusted. In any event, the co-signer's credit is not affected.

I hope that helps. Please let me know if you need further clarification, and please remember to provide a positive rating via the stars (and note that your positive rating is the only way that I'll get credit for helping you, so it is much appreciated!). Thank you. :)

TJ, Esq.
TJ, Esq., Attorney
Category: Bankruptcy Law
Satisfied Customers: 12,810
Experience: JD, MBA
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