What Happens to the Co-Signer of a Car Loan in Bankruptcy?
When a person takes out a car loan, they might enlist the help of a co-signer. A co-signer is someone who signs off on the loan and agrees to take financial responsibility for it if the borrower defaults. But what happens to the co-signer if the borrower files for bankruptcy?
The most important thing to know is that bankruptcy can affect both parties involved in a car loan agreement. When someone files for bankruptcy, creditors may attempt to collect from either party. In most cases, creditors will attempt to get payment from the primary borrower first before pursuing any legal action against the co-signer. However, this does not always mean that the co-signer will be off scot free – in some cases, creditors may still pursue legal action against them as well.
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