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No two Massachusetts bankruptcy cases are exactly the same. Some debtors have joint debts held with spouses, children, siblings, and other individuals such as business partners. Other debtors declaring bankruptcy co-signed loans with other debtors.
If you are financially destitute and incapable of repaying your debts and/or those jointly held with others, lean on a Massachusetts bankruptcy attorney for guidance.
Declaring Bankruptcy With Co-debtors
A loan co-signer or another joint debtor is considered a co-debtor. The burden of the acquired debt extends beyond the bankruptcy filer to the co-debtor. Co-debtors are equally responsible for the debt or loan’s repayment. If you are in such a position, it is important to reaffirm your acquired debts. Otherwise, the co-debtor will be legally responsible for reaping the debt in the event of bankruptcy discharge.
Alternatively, if you elect for Chapter 13 bankruptcy over Chapter 7 bankruptcy, an automatic stay will safeguard yourself and your co-debtor. However, the catch is that you must continue to pay in accordance with the repayment plan.
Acknowledge All Co-debtors When Declaring Bankruptcy
Most of those who declare bankruptcy are tempted to list their own name on paperwork in an attempt to protect co-debtors. However, all co-debtors are to be named on the bankruptcy petition’s Schedule H section. The purpose of this section is to identify co-signers on loans and holders of other forms of joint debt.
Examples of financial obligations that have the potential to include co-debtors include:
- Mortgages
- Apartment leases
- Personal loans
- Student loans
- Automobile loans
In addition to naming all co-debtors, you should also list their address and the name of each creditor. Co-debtors are provided with the Notice to Cosigner as required by the Federal Trade Commission. The Notice details the risks and responsibilities of co-signing on a loan. The small print of the Notice makes it clear that if the borrower defaults, the creditor can make efforts to collect on the co-signer.
The Issue of Authorized Users
Some bankrupt individuals raise the question of whether authorized users are co-debtors. Meet with our Massachusetts bankruptcy attorney and you’ll find the people listed on credit cards as the authorized users for those lines of credit are not considered co-debtors. Though authorized users are empowered to use the credit card, they have no legal obligation to make a payment on the debt accrued.
Those who sign an application for credit as a co-borrower are considered co-debtors. However, if the primary borrower files for Chapter 13 bankruptcy protection and is in the process of paying the debt in accordance with the Chapter 13 repayment plan, the creditor is to temporarily halt collection proceedings against the co-signer.
Learn More During a Consultation With Our Massachusetts Bankruptcy Attorneys
The legalities of filing for bankruptcy are confusing. Instead of attempting to meet all the legal and financial requirements on your own, let our Massachusetts bankruptcy attorney do the work on your behalf. If you are considering bankruptcy or have already started the process, contact us today for a consultation.