Co-signed Loans
I am presently in severe credit card debt and am considering bankruptcy. I have recently changed jobs and have had a drastic decrease in wages. I also bought a new car and am still paying the loan from my old car. My father took out the loan for my first car with the banks understanding that I would be making the payments. My father also co-signed for my new car (brand new). What will happen to my new car if I file for bankruptcy and is my father responsible for the loan? Can I keep my car and what would that entail?
In most circumstances, as long as you are up to date with your payments, secured creditors prefer when people choose to keep the secured property and continue making payments as originally contracted and the likelihood of this is only increased with the presence of a cosigner.
Having said that, in most secured contracts, the filing of a bankruptcy is technically considered an “act of default†and gives the secured lender the ability to terminate the contract and seize the vehicle should they choose, this is an ability that they would prefer not to exercise (as selfishly they will make more money on the contract if they allow you to pay it till full term) and normally, as long as the payments on the vehicle are up to date, secured lenders are please to see someone continue paying the loan as originally contracted.
As the lenders with in each institution and local area tend to have different practices I suggest contacting a licensed trustee to go over all the details in your current situation and they will be able to give you an idea of what can be expected in your region.