The Beltas Law Firm
|Posted on February 24, 2014 at 7:50 PM|
When a borrower initiates a Chapter 7 bankruptcy proceeding, a bankruptcy estate is created. This means that everything the person owns, like a vehicle, and all debts, are listed in their petition. The coowner, who did not file bankrupcty, will be notified about the filing.
The coowner must continue making payments on the vehicle, whether or not the borrower decides to reaffirm the debt. If the coowner does not make payments, then the bank can charge late fees and report the late payments, to the credit reporting agencies, and, in effect, damage the coowner’s credit score. They can also repossess the vehicle, albeit, after the bankruptcy stay is lifted. It's a good idea for a coowner to contact the bank, to determine what that bank's procedure is, since every bank handles bankruptcy filings differently. If the bank will not to accept payments from the coowner during the borrower's bankruptcy proceeding, then the coowner should call an attorney right away.
It should also be noted that the coowner of a vehicle will see the borrower’s bankruptcy filing on his credit report. The notice of the filing, however, will not adversely affect the coowner’s credit score.
Please contact our office, if you are interested in learning more about filing for bankruptcy or about any consumer debt issues you may have.
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Categories: Bankruptcy/Consumer Debt