June 20th, 2014 by Questions
If I have a car and my parents co sign and I claim bankruptcy do they still take car?
Posted from: Ontario
June 20, 2014 at 11:04 am, Doug Stuive, CA | Trustee | CIRP said:
When an individual cosigns on a debt, they are just as responsible for the required payments as the main applicant. This means that if you default on your payments at any time, the lender will contact your parents for payment on your account. If they do not make those payments, their credit is affected.
If you are concerned that the finance company will take your car in bankruptcy it is normally not a concern so long as the payments are being maintained. If you do not make those monthly payments, then your parents would be responsible for making those payments or their credit record would be in jeopardy. It also is more likely that you can keep the vehicle if the payments are up to date at the time of filing your bankruptcy.
If your concern is that the Trustee will seize the vehicle, this usually does not happen unless the value of car is much higher than the amount owing on the loan. Even then, arrangements can usually be made so that this doesn’t happen.
When you meet with a trustee they review your budget and can discuss your options with you in detail so you can decide if you wish to maintain the payments during the bankruptcy.
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