I am a co-signer on a loan with my brother. He is the one that got the loan, he is paying it. All the payments are current and on time. I am filing bankruptcy now. If he continues to pay all payments, will my bankruptcy affect him. I don't want to reaffirm.
2007-09-28 10:03:50 · 6 answers · asked by Jesse's Girl 2 in Business & Finance ➔ Credit
Legally they would have the right to call the loan and make your brother refinance in his name only.
In the real world, as long as the loan is current there is no reason for them to do this.
You might want to rethink reaffirming, if you did and made sure that the lender keeps reporting to the credit bureaus it sure would give you a leg up when you start re-establishing your credit after the discharge.
I know I went through this 7-years ago.
2007-09-28 10:15:52 · answer #1 · answered by ? 7 · 0⤊ 2⤋
The bankruptcy will trigger the loan's do and payable clause ad it will change the terms of the original note. The bank is at a higher risk without you as the co-signor and has all the legal rights to call the note due and payable in full. Obviously, when you took the note out with your brother you had the better credit and/or income or both, so if he has improved his financial position the bank may work with him and redo the note for him without a co signor, or they may require him to get another person, with good credit and income to replace you; which is what your brother needs to be looking for presently. It would also be best if he were to approach the bank and tell them what is happening before they get the notice from the bankruptcy court. It is always better to advise a creditor of a difficulty before they learn of it via another source. If the loan has been maintained satisfactorily and your brother acts first the bank will probably work something out with him, but he needs to act immediately, with all this in mind. Good Luck to both of you and I am sorry about your financial difficulties.
2007-09-28 17:45:38 · answer #2 · answered by H. A 4 · 1⤊ 0⤋
If you dont want to reaffirm it, they can foreclose or they call it do.
Chances are they will call it do. Meaning your brother has to pay it off or get a new loan. I would talk to the bank about this. Let them know what you are doing. Count on them calling it due. Have an option so it doenst hurt your brother.
2007-09-28 17:10:34 · answer #3 · answered by financing_loans 6 · 0⤊ 0⤋
Time has gone by and he might be able to keep the loan on his own. The lender might not even notice your bankruptcy if everything is up to date. But, the lender might have a right to call the loan if you're no longer guaranteeing it. It depends on the language in the loan, which I can't see from here. Also, even if they have the "right" to call doesn't mean that they will.
2007-09-28 17:10:17 · answer #4 · answered by Ted 7 · 0⤊ 2⤋
In theory the lender could foreclose on the loan because the viability of one of the principles (you) has changed. But if your co-signer is current and has a good pay back record it is highly unlikely they would.
2007-09-28 17:08:22 · answer #5 · answered by Anonymous · 1⤊ 2⤋
Ask the lawyer who is doing your bankruptcy
2007-09-28 17:15:05 · answer #6 · answered by Anonymous · 0⤊ 2⤋