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How is a cosigner affected by bankruptcy?

Navigation:  Home > Legal Questions >How is a cosigner affected by bankruptcy?


When you file bankruptcy, all debts are discharged (except for nondischargeable debts, such as student loans or tax liens). Thus, even if there was a cosigner on a debt, you do not have to pay the debt, and the cosigner cannot come after you for the debt, because it is discharged even to the cosigner.


However, because a cosigner has joint liability, the creditor can still come after the cosigner for the full amount of the debt. After the debt has been discharged as to the main debtor (the person filing for bankruptcy), the entire obligation falls upon the cosigner to pay the debt. If the cosigner cannot pay it, unfortunately, the cosigners credit will be adversely affected as though the debt were his or her own. However, any money the trustees of a bankruptcy receives will be distributed to the creditors, and cosigners count as creditors.

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