Be Careful What You Co-Sign, Cautions Columbus Bankruptcy Lawyer

October 13, 2012 12:42 pm Published by

All the Indiana bankruptcy attorneys who work in the Zuckerberg bankruptcy law office are avid readers. We have to be, in order to keep bringing up-to-date Indiana bankruptcy information to clients and readers.  One of the Columbus bankruptcy lawyers read a very interesting story in the Journal of Consumer Bankruptcy News, which reports on court cases that have to do with personal bankruptcy in Indiana and all across the country. 

To me, this case proves an important point.  Of course, as a debt consolidation lawyer offering Indiana bankruptcy help for so many years, debt is what I deal with every day.  But, the moment there are co-signers involved, the debt situation becomes many times more complicated to deal with.   When two or more people have co-signed for a loan, how are these debts treated when one of them files individual bankruptcy in Indiana?

  • Bankruptcy Chapter 7 in Indiana: the co-signer remains on the hook even if the main signer is the only one filing. That means the creditor will be coming after the co-signer for payment if the debt is not reaffirmed by the debtor in the bankruptcy proceedings. Even if that co-signer has long ago ceased being "significant" in the debtor's life, but you can bet that, to the creditor, he or she IS still very significant!
  • Under Chapter 13 bankruptcy law, the co-debtor will be left alone, but only so long as the payments are being made as part of the bankruptcy plan.
  • When there is a spouse, but the spouse was not a co-signer: As part of the process of qualifying to file personal bankruptcy in Indiana, the bankruptcy court needs to evaluate the debtor's ability to repay his or her debts. In order to do that, the court requires that the non-filing spouse's income be included in the bankruptcy paperwork, even if that husband or wife never co-signed any of the loans for the filer.

In the Massachusetts case discussed in the Journal, a 24-year old son was the co-signer on three of his father’s mortgage documents.  The son claimed he hadn’t realized he was signing document that would make him liable for paying the debts.  He’d not read the documents, and his father had told him that in order to be repaid the money his father owed him, he needed to sign the papers.

 Bankruptcy in Indiana readers should hardly be surprised at the court’s ruling: If you sign papers without reading them thoroughly, that’s nobody’s fault but your own.  Bear the consequences of co-signing, they told the college-educated son.

I’ve helped more than 30,000 people in Indiana file individual bankruptcy, and I tell everybody that same thing.  Whether it’s a parent, a child, a sister or brother, an aunt or uncle, a significant other or a friend, don’t ever co-sign your name on a loan unless you’re prepared to repay that money!




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This post was written by Mark Zuckerberg

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