co-borrower filing bankruptcy

In general no, the home will not be impacted, assuming payments have been timely to date. However, the primary borrower will have to try to get the mortgage in his name solely. This may be a problem if the borrower does not have the means for approval.

 

Yes it will. Since you are a co-borrower the BK will show on the other borrowers CR thereby tanking the co-borrowers scores.

You will have to reaffirm the debt or if you don't, depending on the terms of the loan, the loan **could** be accelerated.

You REALLY need to consult with a GOOD BK attorney.

 

The debtor can chose to reaffirm debts that would otherwise be discharged by the bankruptcy. Generally, when a debt is reaffirmed, the parties to the reaffirmed debt have the same rights and liabilities that each had prior to the bankruptcy filing: the debtor is obligated to pay and the creditor can sue or repossess if the debtor doesn't pay.

 

But is the "primary" borrower making the payments in timely fashion?

And can you detail the primary/co-borrower status please? Are you the co-signer? Or are you a minority owner?

 

Enigma, I thought there was case law that came down on this a couple of years ago that specifically said that could not happen?

 

Well, this gets a bit complicated since both your names on the deed. You would have to claim property this in a list of assets for BK filing, and list the underlying debt liability as well.

As Enigma stated, you could "reaffirm", which essentially means you will keep this debt, and commit to paying it.

The problem is that I'm guessing this is not your principal residence, hence it will not come under BK protection.(?)

I would still say the best option here is for the primary borrower to try and get the mortgage in their name only. Though, there is a question of whether you have any equity in this property. To keep your BK "clean", your relative would have to "buy you out" of your equity position.

 

This is what I thought also; if the primary borrower is maintaining timely payments, the BK should not tank their score. It does open up the issue of whether the primary borrower is able to maintain the loan "on their own" credit.

Possibly another "co-signer" could be the answer...

 

It was a Chapter 13 case. It specifically written that way in the BK code. Chapter 7 has no such protection.

 

You must list the codebtor on Schedule H.

Depending if you file Chapt 7 or 13, the BK Trustee may not allow you to make the payments.

 

The Bankruptcy Code uses the term â??codebtorâ? to describe an individual who is also liable for a debt. A bankruptcy discharge doesnâ??t eliminate the liability of a codebtor. There is, however a â??codebtor stayâ? in Chapter 13 cases that prevents creditors from pursuing rights against codebtors until the case is closed, which may be three or even five years after the petition is filed. There are exceptions to the codebtor stay, however. If the codebtor is the one who actually got the consideration for the debt, if your Chapter 13 plan proposes not to pay the debt, or if the creditorâ??s interests would be irreparably harmed by continuation of the codebtor stay, the creditor can seek relief from the court.

 

This one could be messy...I think you need to speak w/a BK attorney to determine what will happen here. Do you know which BK (7 or 13) you're looking at filing?

I strongly recommend looking into trying to refinance the residence in your relative's name only.

A key question here is, can your relative maintain the monthly mortgage payments w/o your payment? There is a good chance that your BK plan would not allow you to make this payment, as this could be seen as "NOT" your primary residence. It is also an asset/liability which must be disclosed in your BK filing.

Unfortunately, the full answer to this question depends upon the rest of your financial situation, (total debt, income, any "must pays" such as child support, alimony, etc.).