The question of co-signers comes up regularly from individuals I meet with. It is not uncommon to hear, “I’m not primary on a debt” or “I’m secondary”. Unfortunately, those labels have little to do with whether you owe the debt. There is another common misconception that you only owe half of the total debt. If you a co-signer then you owe the whole debt (unless your contract says differently, which would be uncommon). The bank wants co-signers so that it has the right to pursue either party (or both) in the event a debt isn’t paid.
In the context of a bankruptcy, it can create some issues. The individual filing bankruptcy will (likely) be relieved of their duty to pay the debt but it leaves the co-signer still on the hook for the debt. This can create some issues for individuals considering filing and it’s one of the reasons banks look for co-signers. It is worth speaking with an experienced professional about your financial situation so that you can make an informed decision about your financial future and its potential impact on your cosigners.
At the law offices of Andersen, Ellis & Shephard, we have represented thousands of individuals in consumer bankruptcy filings.