cosigner and vehicle payments in bankruptcy

There is often some confusion with cosigned vehicles and a bankruptcy filing.
One questioner asked me : “my ex if filing for bankruptcy and he is the co signer on my car and he wants to add that in to the bankruptcy. will they repo my car or how can i protect myself from getting my car taken if he adds it?????”

Answer: If you are current and maintain the payments and insurance, you should be fine and can keep the vehicle when a cosigner surrenders their interest in the vehicle.

In other cases, where you would be the debtor in the bankruptcy, and are cosigned on someone else’s car, you can walk away from the debt, discharging it, leaving the payments to the cosigner.

Alternatively, if the vehicle is yours, and you file bankruptcy, you can continue to make payments on the vehicle and reaffirm the debt, thereby protecting your cosigner. Remember, a cosigner is always liable for the debt, regardless of who has the asset.

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Terrance Leeders

Chicago Bankruptcy Attorney, husband, father, Cubs fan.

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