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  1. #1
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    Nov 2017
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    Default What are a Cosigner's Rights After the Borrower Files Chapter 7 Bankruptcy

    My question involves bankruptcy in the state of Virginia. I cosigned on a vehicle for a friend, I am not on the title. Within 3 months of getting the vehicle, my friend filed Chpt 7. As a cosigner do I have any rights.

  2. #2
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    Sep 2010
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    Default Re: Cosigner on Loan and Now Borrower Has Filed Chapter 7

    You have the OBLIGATION to pay the loan after default, upon the creditor's demand. That's what you agreed to by cosigning it.

  3. #3
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    Mar 2013
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    Default Re: Cosigner on Loan and Now Borrower Has Filed Chapter 7

    Quote Quoting bsaktf2
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    My question involves bankruptcy in the state of Virginia. I cosigned on a vehicle for a friend, I am not on the title. Within 3 months of getting the vehicle, my friend filed Chpt 7. As a cosigner do I have any rights.
    Yeah, you have the right to file bankruptcy, too.

    Otherwise, no, you have no rights, only a debt that falls squarely on you once your friend's debt is discharged.

  4. #4
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    Sep 2010
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    478

    Default Re: Cosigner on Loan and Now Borrower Has Filed Chapter 7

    Why do you think your friend's bk is a problem?

    Unless your friend's intention is to surrender the vehicle he/she is going to continue to make the payments so that he/she can keep it. Do you know what his/her intention is?

    Unfortunately, if your friend does not reaffirm/retain (pay for) the vehicle your "right" is to make the payments as you agreed to do by co-signing. Alternatively, as AJ suggested, you could look into filing bankruptcy.

    Never a good idea to cosign for anyone.

    Des.

  5. #5
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    Default Re: Cosigner on Loan and Now Borrower Has Filed Chapter 7

    Why the friend's bankruptcy is a problem is that he CAN NOT be making any payments on the car. It is ILLEGAL for him to pay one creditor preferentially during a bankruptcy. The trustee decides who gets paid and when.

    Unless the person is in a place to reaffirm the loan after the discharge, the borrower is going to be discharged from the obligation. The car can be repo'd and is almost certainly upside down and they will come after the poster here for the deficiency.

    Since he only agreed to pay the loan and is not an owner, he can't take possession of the car himself.

  6. #6
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    Default Re: Cosigner on Loan and Now Borrower Has Filed Chapter 7

    A preference may be found when payments are made to creditors within a 90-day period (and sometimes up to a year) before a bankruptcy is filed. Once the bankruptcy is filed, the continued payment of an ongoing obligation such as a car payment is not a preference. See 11 USC Sec. 547. Regularly scheduled car payments or house payments made before a bankruptcy filing will not be treated as a preference, and you may keep making those payments after you file.

  7. #7
    Join Date
    Sep 2010
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    478

    Default Re: Cosigner on Loan and Now Borrower Has Filed Chapter 7

    Correction folks. There is no recoverable preference as it relates to a secured lender who is properly perfected.

    If the vehicle payments are not made at all times the lender will repo the vehicle once the automatic stay is lifted. If the debtor's intention is to make those payments and he/she continues to do so the co-signer will be fine.

    Des.

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