Can you be forced to file bankruptcy for co-signing on a loan? What if you signed it years ago and no longer have a relationship with your co-signer? And what are your options if you can’t pay?
There are times you may decide to co-sign a loan. When you start a new business, or see your kids off to college, you may find it necessary to make sure you get access to certain services. And while most of us who deal with debt every day recommend you not co-sign if at all possible, we also know why so many people choose to do it.
But what happens when that loan comes back to haunt you?
When Your Co-Signer Won’t Pay
When you co-sign for a loan, you may not imagine the worst case scenario. But far too often that’s exactly what happens. People let you down. They go through major crises of their own, or they simply default on the loan and disappear. I’ve seen this happen with business partners, boyfriends and girlfriends, and even children. And when it happens, you may be left entirely responsible for the debt.
Once one of the co-signers stops paying, collection agencies often come after the other co-signer. They will pursue the payments for years if they have to, and some even resort to scary and harassing tactics.
Often the co-signer will just pay up in order to make the pressure go away. But if you don’t have the money, it can leave you frustrated and confused about your options.
Your Options as a Co-Signer
As a co-signer you are legally responsible for the debt, no matter how unfair that may seem and how badly your other co-signer might have behaved. If you can’t pay the debt on your own, first talk with the creditor and see if they will bring down the debt or let you pay in small payments over a longer time. A lot of creditors will do this if they believe it will get the debt paid, even in part. Get the agreement in writing before you send them a single dollar.
However, if you have more debt than this one loan, you may be completely unable to pay it back. Say you’re already struggling to make your car payment – how can you then afford to pay back a mortgage you share with your ex-boyfriend for a house you no longer live in? In that situation, you have to prioritize your debts and possibly consider bankruptcy.
Filing Bankruptcy for Co-Signing on a Loan
Fortunately, bankruptcy isn’t as scary as it may seem. As a bankruptcy attorney in Memphis, TN, I’ve helped many people file bankruptcy for co-signing on a loan. Usually they have other debts, like credit card debt, that we include as well.
At Darrell Castle & Associates, we understand how frustrated you may feel after someone leaves you with their debt, and we help you work through that and overcome it. You may feel abandoned by your co-signer, but you won’t feel abandoned by us. You’ll finally have someone on your side who will help you come out on top. We help you get rid of the debt and we’ll even help you improve your credit score to an A rating within a year after your bankruptcy.
Contact us today to talk with a Memphis bankruptcy attorney about your debt. The conversation is free and could change your life.