You may know someone that is looking for auto financing following bankruptcy discharge and you’re considering being their co-signer. While your friend or family member most likely greatly appreciates the noble action there are some points you may want to consider before signing on the dotted line.
While each bankruptcy case and auto loan is different between customers co-signing a loan always means the same thing. If the primary borrower defaults on the loan or misses payments the lender can come after you for the money.
Co-Signing an Auto Loan Before Bankruptcy
When a debtor files for bankruptcy protection – whether it be a chapter 7 or chapter 13 case – the debtor is protected under the automatic stay policy. This means that the lender is not allowed to attempt to collect any money from the primary borrower until the stay is lifted after the meeting of creditors. They can, however, go after the co-signer. This means you are now responsible for paying the entire car note back.
If you cannot afford to make the monthly payments on your own you may be forced to surrender the vehicle or sell it. The only problem is as a co-signer your do not have any physical rights to the vehicle. So you will need the primary borrower to sign the vehicle to you before you can release it.
Co-Signing an Auto Loan After Bankruptcy
Due to damaged credit after bankruptcy many debtors are obligated to get a co-signer in order to have decent interest rate. Luckily, not all lenders will require this, and your friend may be able to secure an auto loan on their own.
Here at BankruptcyAutoFinancing.com we work with a nationwide network of subprime lenders that have both the tools and experience to help bankruptcy clients get approved for a loan; and sometimes without a co-signer.
While these loans may not be for a brand new car buying a used car after bankruptcy has many benefits. You not only have the opportunity to avoid much of the car’s depreciation – in return staying right-side-up on the loan longer – but also to have the loan paid off quicker with more affordable payments.
Remember, we are not lawyers and cannot give legal advice. The situations discussed are only our experiences over the years and may vary with each customer.