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Four years ago, I thought I was cosigning on my son's car. At the time, I was in Oklahoma and he was a New Mexico, so everything was done through FedEx. I have since moved to New Mexico and experienced some financial hardships. Therefore, I’m looking at filing chapter 7 bankruptcy before the end of the year.

I found out that I am actually the primary on the car and he is the cosigner. How is this going to affect the loan if I file for bankruptcy? The loan is current and he has never missed a payment. Will he be able just to continue making payments and keep the car? I have my own car that I still owe about $5000 on that I want to keep as well. That loan is also current.

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  • I knew someone who went through a bankruptcy and there is a process for keeping a car and the loan against it. I believe the term was reaffirmation. A bankruptcy attorney can explain what options you have. Commented Mar 27 at 13:37

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If he wants to keep the loan he needs to take you off of it (probably through refinancing). Otherwise I'm guessing it will be called and since both of you are responsible your son will be left holding the bag. There's no such thing as "primary", you're both equally responsible.

You should probably discuss this with your bankruptcy attorney.

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    See past answers about co-signing for more details about what your and your son's, actual obligations are. You going bankrupt does not free him from obligation to pay off the loan any more than his going bankrupt would free you from that obligation. That's the whole point of cosigning; it's a stronger guarantee that the lender gets their money.
    – keshlam
    Commented Mar 27 at 2:38
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    This answer (and more so its comment) seem to be responding to the question "If I declare bankruptcy, can my son get out of paying for the car?" I think OP is worried about OP's bankruptcy leading to OP's son automatically losing his car. I don't think OP is trying to figure out how their son can avoid payments.
    – Teepeemm
    Commented Mar 27 at 18:49
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    @Teepeemm What I said is that it will likely be called, meaning there will be a demand for an immediate full payment
    – littleadv
    Commented Mar 27 at 18:57
  • @littleadv: And the son probably says "no possible". The lender has to decide between repossess or let it continue.
    – Joshua
    Commented Mar 27 at 21:54
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    @Joshua the lender will first of all take the car, and then demand full repayment from the son. In essence, the lender may trigger son's bankruptcy as a result, and will be in their full right to do so, before allowing the loan to continue with only one insolvent borrower.
    – littleadv
    Commented Mar 27 at 22:02
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You should consult with your lawyer about two things before your bankruptcy:

Should your son refinance the car loan to get your name off of it?

You don't want your bankruptcy to make the auto loan insolvent.

Is it advisable to get your name off of the car's title?

This may be seen as an attempt to hide assets.

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    I disagree that this must be done "before" your bankruptcy, though I'm not quite sure what "before" might be referring to: filing or discharge? This is exactly the sort of scenario where reaffirmation of the debt is almost certainly possible and perhaps even preferable.
    – Michael W.
    Commented Mar 28 at 15:59
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    I'm not sure removing the name from the title before the bankruptcy can shield it, it may be seen as an attempt to hide assets.
    – littleadv
    Commented Mar 28 at 17:24
  • @littleadv Good point, I made my answer less "hair on fire" and more "speak to your lawyer"
    – MonkeyZeus
    Commented Mar 28 at 19:24

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