How Will Bankruptcy Affect Co-Signers?
Under Nevada’s community property laws, generally speaking, co-signers on loans can be held legally responsible for balances owed on debts such as mortgage loans, student loans, car loans, medical debts, credit cards, and some tax debts, if bankruptcy is filed by the primary loan holder. People with good credit who agree to co-sign for someone with less perfect credit put themselves at risk if debts are called due, even if this is a family member just trying to help.
Co-Signers Share Responsibility for Debt
The law considers co-signers on loans as co-debtors who are equally responsible for debts. In some cases, the person with good credit who co-signs on a loan may have his/her own financial problems later on. If that happens, and the co-signer files for bankruptcy, the same laws apply to the primary loan holder. In either scenario, bankruptcy can have a big impact on both parties.
If a co-signer does not have the funds to repay a debt, they may face harassment and various penalties by the lender. Depending upon the size of the loan, the co-signer may be responsible for thousands of dollars. Without the funds to pay off the debt to the lender, the co-signer may end up with a damaged credit rating and financial hardships that require him/her to file for bankruptcy with Las Vegas lawyers.
Unsecured debts are much riskier for lenders than secured debts, because they lack connection to tangible assets that can be seized in a bankruptcy. Creditors who issue unsecured loans lack many of the basic protections afforded by law in a
People with loan co-signers may have some protection against creditors during bankruptcy by filing for Chapter 13 bankruptcy instead of Chapter 7. In many cases, the Chapter 13 process automatically discharges co-signed consumer debts, unless the loan was used to fund
