Co-signed Line of Credit
I have recently declared bankruptcy, my husband has not, nor does he need to. My husband has a line of credit on his house, not mine, never has been. He recently made some changes to his line of credit(paid of large sum then renegotiated another amount). They asked me to signed also, beleiving that this was a matrimonial home. I advised my trustee that I had co-signed and they have to include it in my bankruptcy. However, this should not be a problem for the bank, as my husband is not going bankrupt and has sound financial assets. My question is: Will the bank be able to call in the line of credit, insisting he pay it immediately?
Technically speaking yes, the creditor could call the loan if they desired. The way a loan document is worded, if any party files a bankruptcy this is termed to be an “act of default,†and upon any act of default the creditor is well within their rights to call the loan. However, most creditors understand that the major risk of calling the loan immediately is a high risk of resulting bankruptcy and as a result are willing to work with the existing debtor.