Co-signer

[Rick9972]

This is a just curious question that came up this weekend. DD is trying to purchase her first vehicle. We found several good buys and think she has found the one she is going to get. (Qualified there for zero percent financing)

The place that has the vehicle she really, really wants qualified her for zero percent with a co signer. I told her that we could not co-sign for her since we plan on filing the 28th of May.

DW has asked me to explain why we cannot, since it is her loan. I tried and have been unsuccessful in explaining so far.

So the question is, Could I or Why can I not?

Thanks

[dingdong]

You will have to list it as a debt on your petition. In doing so, the lender will get notified of your BK.

Might cause more headaches than it is worth.

Also, if you are on title on the car, it will become part of your BK estate.

IF you put a down payment on the car, you may have issues with equity and exemptions.

[ShouldWeFile]

You may be able to co-sign if your credit qualifies (are you current on almost all of your monthly debt payments). However, you will need to delay the BK filing at least until several days after signing for the car so that the dealer has the loan funded through the lending institution.

There will be no equity in the vehicle (unless there is a VERY large downpayment), so I don't see anydownside to co-signing on the loan. You actually will not be liable after filing...

[StartingOver08]

In my opinion you should not muddy the water by co-signing the loan, but I don't have all the facts.

Should you decide to co-sign; you need to wait longer than a few days to file. Wait until the lien is 'perfected' on the new vehicle as the Trustee can avoid the lien if it is not perfected and potentially take the vehicle. I don't know which state you are in, but the link below illustrates the process for AZ. You can check out your state, there are all kinds of examples of unperfected liens.

http://www.jsslaw.com/newsletter_details.aspx?id=21

Moran Law has a good article too. http://www.moranlaw.net/car-ownership.htm

[kenshirley]

Normally a co signer is just that and not part of the title.
The co signer is only responsible for the loan should the primary default.
Now, if she was to default right away I would think you trustee could say this is abuse.
And the trustee may want to know why you co signed knowing you were about to file too.
It may not be a good idea.

[whipster1]

I agree with kenshirley. You are in essence applying for new obligations right before filing. That is a red flag.