True or False?
By Minden Lawyers, Sep 14 2017 10:58PM
Filing a personal Chapter 7 bankruptcy will discharge debt obligations that may arise from my personal guarantee or cosignature for someone else.
Answer: True. Bankruptcy can discharge debts on which you are a co-signer or guarantor for another person or business entity. Furthermore, discharging your personal guarantee or cosigning of the debt for another person or entity will not cause the principal borrower under the loan to be in default on the loan. A common example, is a parent that cosigns on a vehicle loan for their child. The parent files bankruptcy, that debt as to the parent may be discharged in the parent’s bankruptcy but does not impact the child's rights to retain the vehicle and to continue paying under the terms of the automobile loan agreement, so long as the child is in compliance with all remaining terms and conditions of the agreement.
Nothing stated herein constitutes the giving of legal advice. Every case is different. If you are dealing with a legal matter, call an attorney to discuss your specific case.