When debt seems to linger like an unshakeable cloud, a consumer in Pennsylvania may begin to feel desperate for help. Personal bankruptcy protection is available for those who wish to eliminate unsecured debts that have simply become unmanageable. However, it’s worth noting that filing for bankruptcy may have an impact on a friend or family member who cosigned a loan for a person who subsequently files for bankruptcy.
A bankruptcy filing may be tricky, particularly if one’s finances happen to be intertwined with those of another. Although Chapter 7 bankruptcy stops debt collectors from harassing a consumer, this protection isn’t necessarily extended to cosigners on a loan. Thus, if the cosigner doesn’t remain current regarding the debt payments, his or her credit might be jeopardized.
Chapter 13 bankruptcy protection offers some safeguards that can help cosigners. This is because it results in a debt repayment plan that the person filing for bankruptcy must follow after it has been approved by the Bankruptcy Court, so everything isn’t automatically thrown into a cosigner’s lap. It’s worth noting that cosigning on a family member’s loan is often not considered a good idea, since it may end up being financially detrimental for the cosigner.
When people are over their heads in debt -- whether it is credit card debt, medical debt or something else -- they naturally may be unable to live normally from a financial standpoint. This is why bankruptcy protection can be immensely helpful for Pennsylvania consumers. Indeed, it typically can provide rapid debt relief. Legal guidance may help a consumer in our state in exploring and taking advantage of the best options for discharging or reorganizing extensive debt and thus reclaiming his or her peace of mind.
Source: Los Angeles Times, "Filing bankruptcy? How to protect loved ones who cosign loans", David Lazarus, Aug. 1, 2014