If you are in a difficult financial situation in the North Country, you may be considering the option of Chapter 7 bankruptcy. Chapter 7 bankruptcy can be beneficial for those in the North Country as it provides financial assistance for certain types of debts, removing your responsibility to pay back certain creditors.
At Grady PK, PLLC, our goal is to provide our North Country clients with the compassionate guidance they need if they choose to go the path of Chapter 7 bankruptcy. We will work with you one-on-one to find the right bankruptcy option for your situation, providing you with the clear guidance you need to understand what your options are. In this article, we will be discussing what happens to your co-signer if you file Chapter 7 bankruptcy and how this will impact their financial responsibilities regarding debt. For further assistance with your bankruptcy case, call our North Country office today to speak with a compassionate bankruptcy attorney in New York.
What Happens to My Co-Signer If I File Chapter 7?
If you are in a tight financial situation in North Country, NY, you may be considering a very common option, which is Chapter 7 bankruptcy. However, this option will be more complicated if you have a co-signer since you will need to understand what happens to your co-signer if you file for bankruptcy.
The main thing you need to understand about what happens to your co-signer if you file for bankruptcy is that Chapter 7 does not protect them from creditors. When you file for Chapter 7, you will get an automatic stay, which prevents creditors from pursuing any collection activities against you. The problem with this is that the automatic stay will not cover your co-signers, which can leave them vulnerable to creditors.
You should also be aware that your debt being discharged (wiped away) isn’t going to have an impact on your co-signer’s payment responsibilities. Because of this, your co-signers can be put in a difficult position when you file for Chapter 7 if you don’t have certain strategies in place.
How Chapter 7 Bankruptcy Affects a Co-Signer
As far as bankruptcy goes in the North Country, chapter 7 bankruptcy is considered to be a very straightforward option. All you need to do is file for Chapter 7 and attend a meeting of creditors before completing the debtor education course. Once you follow all the steps, the court will issue a discharge that removes your obligation to pay certain debts or wipes out all of your debts.
If you have a co-signer for some of your debt, they could still be left on the hook to pay off your debt, even if it is technically discharged for you. This could mean that any of your co-signers may be held responsible for paying off unsecured debt and secured debt once you are no longer accountable for it.
One way around this is if your co-signer files Chapter 7 for themselves, which would discharge (wipe away) the debt that they co-signed on. However, your co-signer may not necessarily want to file for bankruptcy.
In any situation where you are filing for bankruptcy, you need to take the additional step of hiring a North Country bankruptcy attorney. This is especially crucial if you have a co-signer involved since you don’t want to leave them on the hook for your debt. A bankruptcy attorney can help you file for bankruptcy, take the necessary steps to protect your co-signer, and navigate this process with confidence.
How to Protect Co-Signers When Filing For Chapter 7
Now that you know what happens to a co-signer if you file for Chapter 7, you may also want to know how you can better protect your co-signers. Even though Chapter 7 is not going to extend to your co-signers, this doesn’t mean that there aren’t certain things you can do to protect them from your creditors and collection activities. Here are the two options you have:
- Reaffirm the debt: Before you get a discharge through Chapter 7, you can opt to reaffirm secured debts such as mortgages, car loans, and high-value items. By reaffirming debt, you are giving up the benefit of the discharge so that you are held personally liable for those obligations.
- Pay off the debt: When you receive a Chapter 7 discharge, you are no longer obligated to pay back certain debts, but you still have the option of doing this voluntarily. By voluntarily paying off dischargeable debts, you can better protect your co-signers. Also, many of these types of debts allow you to make monthly payments, making it a more realistic option for most people.
A step you should take when you have decided to file for Chapter 7 bankruptcy is to speak with your co-signer about this decision. Let them know what happens if you file for Chapter 7 and how this will impact their financial responsibilities. Keeping them in the loop can help reduce their stress and help them understand the different strategies you are taking to protect them from being held liable.
North Country’s Top Compassionate Bankruptcy Attorney
Navigating how to file Chapter 7 bankruptcy and how Chapter 7 affects co-signer credit can feel overwhelming, but it doesn’t have to be. At Grady BK, PLLC, we will help you every step of the way as you navigate Chapter 7 bankruptcy. Having a North Country bankruptcy attorney on your side will help you to have the knowledge and confidence you need as you manage your bankruptcy plan and financial goals.
At Grady BK, PLLC, we understand how stressful bankruptcy can be for North Country residents, which is why we are dedicated to providing our clients with compassionate and personalized assistance. We treat each of our clients as if they were our only client, ensuring you can file for Chapter 7 while protecting your co-signer.
Contact us today at 315-299-9005 to discuss your financial situation with a bankruptcy attorney. Our team at Grady BK, PLLC, is ready to provide you with the legal assistance you need as you file for Chapter 7.
