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Mortgage Co-Signers Liability

What happens to a co-signer on a mortgage if the mortgagee goes bankrupt??

One Response to “Mortgage Co-Signers Liability”

Barton Goth, GCO Inc. Bankruptcy Trustees said...

This depends on whether the bankrupt continues to make payments on the home or not. In most instances the debtor wants to keep the house, continues to make payments and there is no impact on the co-signer. However, if the debtor ceases making payments prior to bankruptcy and then quits the premises, upon bankruptcy they would be cleared from any shortfall and the co-signer would be required to make payments until the shortfall was paid in full.