What happens when your co-signer declares bankruptcy? | Loans Quebec

Image result for cosigner bankruptcyWhen you want to borrow money, but your credit history does not allow you, the co-signer is the ideal solution to the problem. The co-signing of the loan opens many closed doors before, allowing you to get the loans you could never have had. A co-signed loan could allow you to buy the car you need, buy the house of your dreams, or simply manage your daily finances.

While the receipt of the first loan is an exciting event in everyone’s life, it is of great importance to choose the co-signer. A good co-signer could be the help you need so much, allowing you to show the creditor that you are financially responsible. A co-signer who has financial problems could, conversely, threaten your financial situation.

It goes without saying that banks only accept co-signers who have good financial records, but it is difficult to accurately predict what will happen next only based on numbers. The co-signer could be in perfect financial health now, but a future job loss or financial emergency could negatively affect their stability. Because of this, it is important that you choose your co-signer thoroughly and that you are ready to make all the payments yourself.

The loan

Image result for loan In general, the co-signatory’s mission is to reduce the risks associated with the loan and to help you get the money you need. The co-signer is not there to meet your daily needs or cover your uncontrolled expenses. If you have the help of a co-signer for the right reasons, you should be able to repay your loan without any problem, even if the co-signer declares bankruptcy.

Understand that the presence of a co-signer is not an excuse to stop making payments. Also, if your co-signer declares bankruptcy and you depend on him, be sure to notify your creditor and ask for advice so that he offers you other alternatives.

You are by yourself

Once your co-signer declares bankruptcy , he is not legally obliged to make the payments for you if you are unable to do so. This may seem like a problem, but, in fact, it all depends on your current financial situation. However, the creditor might be worried and think that you will be unable to make the payments yourself. In such a situation, the best thing to do is to continue making payments on time and in full, which will encourage your creditor to trust you and, therefore, improve your credit history.

Your credit report

One of the problems when your co-signer declares bankruptcy is the possibility of having on your credit report the mention “participation in the bankruptcy”. However, be aware that this will not affect your credit history, which will allow you to improve your credit score while making the monthly payments. At the same time, keep an eye on your credit reports, to make sure that nothing unexpected and strange is there. Also, even if the co-signer declares bankruptcy, remember that you are not the one who did it, so do not panic.

If you can not make payments

Image result for can't make payments Your credit history will be negatively affected in case you are unable to make the payments. If, for example, you use the loan money to buy a car, the creditor may come to seize the car in question or, worse yet, the creditor may sue you for the amount you owe him. . In fact, when your co-signer declares bankruptcy, you become the only person legally responsible for the loan and for the payments that come with it.

In conclusion, if you expect the help of a co-signer to get a loan, make sure you choose your co-signer. Remember that the co-signer should reduce the risks associated with the loan in the eyes of the creditor and not make the payments for you. A loan is a big undertaking, so be sure your co-signer is in excellent financial health. Do your research and take the time to analyze the options available to you. Thus, you will avoid any negative impact on your credit history even if the creditor declares bankruptcy or the proposal of the consumer .