How are my Co-Signers Affected if I File Bankruptcy in Georgia?

When you file bankruptcy in Georgia, your co-signers are affected differently, depending on whether you file Chapter 13 bankruptcy or Chapter 7 bankruptcy. However, if the co-signer continues to pay on the debt that he or she owes, then your bankruptcy should not change the co-signer’s status with each of his or her creditors.

There are a few differences between Chapter 7 and Chapter 13 when it comes to co-borrowers:

Chapter 7 Bankruptcy: When you file a Chapter 7 bankruptcy in Georgia, most of your debts are completely discharged (meaning that you would not have to pay them). However, since a co-signer who does not file bankruptcy jointly with you signed his or her name to a loan to guarantee repayment, he or she is left with the burden of repayment. Thus, in order to avoid negative reporting on his or her credit, the co-signer should continue to repay the debt on a timely basis.

Chapter 13 Bankruptcy: When you file Chapter 13 bankruptcy in Georgia, your debts would be consolidated and you would make regular payments under a court-ordered repayment plan. As long as you follow the plan, your co-signers are protected by a “co-debtor stay.” However, if you are not fully repaying your unsecured creditors or have made late payments to secured creditors, then your co-debtor’s credit score will be affected. The best thing for the co-debtor to do is to fully repay all debts in a timely manner in accordance with the original contract with the creditor in order to avoid default and/or reports of late or missed payments on his or her credit report.

If you are considering filing bankruptcy in Atlanta, Georgia and would like to determine which type works best for your personal and financial needs, please contact the Law Offices of Charles Clapp at 404.585.0040 to schedule a free initial consultation.