QUESTION
If my parents cosign on a home loan, and they declare bankruptcy, will my credit be affected?
Asked on Jan 07th, 2011 on Bankruptcy - California
More details to this question:
If my parents cosign on a home loan, and they declare bankruptcy, will my credit be affected?
9 ANSWERS
No. If you make the payments on the loan. As a cosigner, you will still be liable to repay the loan.
Answered on Feb 05th, 2011 at 5:58 AM
Shawn Christopher
It should not affect your credit, as long as the payments continue being made. If payments are stopped, then the late payments and potential foreclosure will be reported on your credit. Also, a notation may be placed on your credit report, something like "co-borrower filed bankruptcy".
Answered on Jan 12th, 2011 at 1:43 PM
Civil Litigation Attorney serving Ventura, CA
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Law Offices of Daniel A. Higson, APC
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Depends if there is a default on the home loan.
Answered on Jan 10th, 2011 at 5:28 PM
Chapter 7 Bankruptcy Attorney serving Lisle, IL
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Mankus & Marchan, Ltd.
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Your credit rating should not be affected, although the bank may accelerate the loan or seek additional guarantors. Alternatively, your parents can reaffirm their obligation to the bank in their bankruptcy.
Answered on Jan 10th, 2011 at 3:43 PM
Business Law Attorney serving Milwaukie, OR
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George Hoselton Bankruptcy
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Assuming that your parents co-signed on a home loan for you, the bankruptcy will not affect your credit. If the assumption is correct that you are the on the loan with them, you will now be solely responsible for that debt.
Answered on Jan 10th, 2011 at 9:13 AM
No. By co-signing your mortgage loan your parents personally guaranteed your promise to repay the loan. In other words, if you fail to pay the lender may look to your parents for payment. If they file bankruptcy and obtain a discharge of the debt, they will no longer be responsible for it. Your credit should not be affected.
Answered on Jan 07th, 2011 at 10:28 PM
Your credit is not affected if a co-signer of any type of loan files for bankruptcy. Of course that assumes that the payments on the co-signed debt will continue to be made timely. Home loans are not dischargeable because they are secured debts. The bank might refuse to send you statements while your parents are in bankruptcy for fear of violating the automatic stay but you must continue to make the required payments by mail. You need to find out where the payments should be sent and make sure you have proof of payment. If you do, then your parents' bankruptcy should not affect your credit rating.
Answered on Jan 07th, 2011 at 8:13 PM
Family Law Attorney serving Kingston, NH
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DiManna Law Office, LLC
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As long as you are current on the loan they co-signed on then it should affect you.
Answered on Jan 07th, 2011 at 6:28 PM
Bankruptcy Attorney serving Victorville, CA
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Law Offices of Lady Justice
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If the home loan payments are still being paid, then it will not affect your credit. If the home loan payments are not being paid, then as a cosigner you are still liable for the whole debt. So if you do not make payments, your credit will be effected.
Answered on Jan 07th, 2011 at 6:28 PM