I co-signed for others, now facing Ch 13 what happens?

[deepend]

I have been up all hours reading posts here since that sickening moment of realization that I was in deep, deep trouble with very few options left. I've searched and found a couple of posts relating to the co-signer or co-maker filing BK but the information is sketchy and I'm very worried what will happen to the people for whom I cosigned.

I'm over the median and can't pass the means test, so I'm pretty sure that when I file (hopefully this summer) I'll be in a Chapter 13. Like so many here, I had almost perfect credit until now. Because of that I was able to help my daughter by being a co-maker on her car when she couldn't qualify by herself last October.

I also co-signed on an (ex) friend's 10 year student loan for about 5k almost 2 years ago.

And finally, I am a JTIC (joint tenants in common) on a mortgage on a property that is occupied by the brother of the other person on the mortgage. The brother is paying the equivalent of the mortgage payment - there's no profit in the arrangement. He was to purchase the home from us as soon as he cleaned up his credit and saved a down payment after his divorce but here it is 5 years later and he still can't get a loan to buy it.

I am horrified that my financial disasters may affect my family and friends!! I have not found an attorney yet but these questions will top my list when I talk to them. Has anyone gone through this? What might happen??

The car loan papers for my daughter's car say the loan is automatically in default if anyone files bankruptcy. She can't qualify for a new loan all by herself at this point - she's a full time student without enough income by herself.

Thanks for any advice. (This forum is the only bright spot for me right now - can't tell you how much it has meant to be able to read posts and not feel so incredibly stupid and alone in these past weeks. Thanks.

[sassiebaz]

I'm so sorry. I know you are hoping for advice, which I have none to offer. But, I just want to say I know you must feel terrible. But don't! We all run risks when co-signing and that includes the other party involved. You have to do what you have to do! I feel for ya! Good luck!

[Flamingo]

When you co-sign for someone you know that it means they cannot get that credit by themselves in their own name and you, as the co-signer guarantee that you will make the payments if they cannot. So you see where this puts the loans that you co-signed. If the other person on the loan cannot get the loan refinanced and out of both names before you file, you've got a situation. The student loan is small and you should advise your ex-friend to get it out of both names and just in his - it is not dischargeable anyway but could affect his credit if you file. As for the rest, get a consultation with a BK attorney so you know what you can and cannot do. Best of luck to you.

[AngelinaCat]

AAARRRGGGHHHHH!! I hate to say, it 't'ain't good news.

'Hub and I are a Ch7, not a Ch13, so I don't know how all of those loans will play out in a 13, but I can tell you how it happened for us in a Ch7. A ?friend? with a zilch credit rating, needed a new car. 'Hub co-signed for him trusting that this ?friend? would make the payments. We never owned or drove the car.

Everything went fine for a few months. Somehow, ?friend? managed to refinance a couple of times w/o our knowledge, to the tune that ?friend? ended up way upside down in his loan.

He started missing payments to the point that the collectors were coming after US! We got ahold of ?friend? and *insisted* that he turn the car in. He did. He owed $19,000+ plus on it. It was sold at auction for $6,000, and all of us were considered responsible for the $13,000 difference.

?Friend?'s mortgage holder started lawsuits against us. 'Hub and I included this debt in our BK and it was discharged. ?Friend? did not file BK and is stuck with a $13,000 judgment. And he blames us that we lost his car for him!!! HOWZAT??? No pay, no car!!

Moral of the story: Don't EVER, NOT ever at all, co-sign for anybody, no matter how good they are, or honorable they are. Situations can change in ways you can't perceive--or be ready for, no matter how well you think you have thought things out!

[justbroke]

I'll just echo and underscore what Mrs. Cat wrote above. Howver, I'll go one further. Don't even co-sign for a family member.

Never buy a house for them either; especially if they promise to pay you monthly rent.

[deepend]

Thanks for the replies and good wishes!

I do truly understand the lender needs to take action to protect the investment and can't fault them for that. I guess I need to step up the pace finding an attorney now. I'm in OK and my primary residence is here but the other property is in another state, so that will probably complicate things.

And you're right AngelinaCat - co-signing is very very rarely a good thing. For either party, I'm now learning!!

Is it maybe a possibility that I could re-affirm my daughter's car loan to avoid any action?

Again, thanks.

[deepend]

A big AMEN on not buying houses for anyone. LOL :big sigh: He's paid on time without fail but I never ever wanted to be his landlord.

[AngelinaCat]

First thing to ask a prospective attorney is what can be done about the daughter's car.

Good luck to you and your daughter!