What Happens To Co-Signed Loans In Florida Bankruptcy Cases

In this article, you will discover:

• Whether a cosigner is responsible for a loan during bankruptcy in Florida.
• The risks of cosigning a loan for someone who is filing for bankruptcy.
• Whether a cosigner has any repayment options if the borrower files for bankruptcy.

Can A Cosigner Be Held Responsible For The Loan During Bankruptcy In Florida?

Yes. When a debt is discharged through bankruptcy, it is discharged only for the initial signer, making the consigner still liable for that debt. This is true for both Chapter 7 and Chapter 13 bankruptcy.

For example, if you are a consigner on a vehicle loan and don’t benefit from the vehicle in any way, you will still owe money even after the person who used to drive that vehicle daily has been discharged from the debt.

This is something that many people don’t realize when they cosign. You are not simply helping someone out; you are making yourself jointly responsible for the repayment of the loan.

What Are The Risks Of Cosigning A Loan For Someone Who Is Filing For Bankruptcy?

Wherever you cosign on a loan, you are making a gamble that the vehicle’s driver will make monthly payments and pay the loan off. Whether they file bankruptcy or not doesn’t really change this dynamic or your obligations as a cosigner.

You are now left with a dilemma: do you sell the vehicle for less than what it’s worth? Do you keep it and continue making monthly payments? This is why it is incredibly risky and generally not legally advisable to cosign for another person, as this legally obligates you to pay the loan debt if they can not or do not make those payments.

Attorney Alec Solomita is an experienced Florida bankruptcy lawyer who has helped countless clients just like you navigate the intricacies of bankruptcy law. With over 16 years of experience, he is prepared to advise you on the pitfalls of cosigning for a borrower in bankruptcy.

Still have questions? Ready to get started? Contact Solomita Law, PLLC today to schedule an initial consultation.

Do You Know Of Any Repayment Options For Cosigners If the Borrower Files For Bankruptcy?

While you may be able to contact the lender and work out an arrangement, there are no guaranteed avenues to lessen this debt. Your credit will still be impacted, and if the original signer has missed payments, you will now have to contend with late fees and interest.

If you do cosign for someone, check in monthly to make sure that they are still making payments. If you notice a payment has been missed, make a phone call and ensure the signer understands their obligations. It’s important to be sure that you trust the signer and that they are financially able to make monthly payments until the debt is paid off.

Can Cosigners Dispute Their Liability In Florida Bankruptcy Cases?

No. If you cosigned for the original loan, you are responsible for its repayment. Florida law will not allow you to contest your liability.

How Do You Handle Cases Where The Cosigner Is A Close Family Member Or Friend And Emotions Run High?

In situations like this, I tell my clients : “I am your attorney. I represent you, and you are paying me to represent you and you alone. I can not also represent your family members. If you discharge this debt, you will not owe this debt anymore, but your family member still will.”

Ultimately, it’s important for the original signer to truly understand that simply because a debt goes away for them through bankruptcy, it won’t go away for their mother, father, or older brother who cosigned in good faith.

Still Have Questions? Ready To Get Started?

For more information on What Happens To Co-Signed Loans In Florida Bankruptcy Cases, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (407) 305-5599 today.