Co-signed Loans

Learn what happens to loans in which a bankrupt had co-signers, and the responsibilities of the co-signers for continued payment of the loan(s).


Your bankruptcy does not cancel the responsibility of anyone who has guaranteed or co-signed a loan on your behalf. For example, if a friend or family member co-signed a loan for you, that friend or family member would be liable to pay the loan in full even if you decide to file for bankruptcy.


Asking someone to co-sign for a loan, credit card or line of credit is a huge responsibility. The lender considers the co-signer to be a joint borrower, and becomes equally responsible for the repayment of any balances owing on the loan, credit card or line of credit. If a borrower doesn’t pay the debt, the bank or lender can demand that any borrower listed in the loan or credit agreement pay the entire amount.


Note: Read credit card terms carefully. The terms for some cards may state that authorized users (secondary cardholders) are responsible for any outstanding balances, even if they don’t sign the credit card application. 

The right to receive information

All of the co-signers have the right to receive the same information from the lender about the loan, credit card or line of credit when the lender is a federally regulated financial institution.

Example: The lender must provide all co-signers with copies of monthly statements and credit agreements, unless consent is received either verbally or in writing (paper or electronically) to waive this right. This allows co-signers to keep track of the status of the loan—such as whether payments are being made or if the terms and conditions have changed.







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