A co-signer’s bankruptcy can impact your credit score
Get Your Free Case Review

A co-signer’s bankruptcy can impact your credit score

by | Nov 13, 2015 | Bankruptcy

Often, those who co-sign for loans with other people — a parent who co-signs on a child’s student loans, for instance— are told repeatedly about the risks. In that example, if the child does not pay the loan back, the parent still has to pay.

However, it’s interesting to note that there are certain risks to the initial co-signer, as well, especially if the other party decides to file for bankruptcy.

For instance, a young woman got her father to co-sign with her on her student loans. She then started paying them back, as she was supposed to, but her father decided to file for bankruptcy. He did not tell her he was doing so.

Suddenly, her credit score started falling, there was a freeze on her account, and she couldn’t pay each month. Her loan was sent to another company, which was trying to collect the loan in full.

What becomes important in cases like this is which type of bankruptcy was filed. If Chapter 13 is used, the above should not happen. Chapter 13 is designed not to harm co-signers, and it is also a type of bankruptcy based on a payment plan.

Chapter 7, though, could have this impact on co-signers, as it is a liquidation-style of bankruptcy, so lenders often scramble to collect as much as they can, all at once. Co-signers can then see their scores drop when loans that they are responsible for are marked as being in bankruptcy — even if they did not file for it themselves.

Bankruptcy can be quite useful in Wisconsin, but be sure you know all of the ramifications of filing, especially if you’re a co-signer on a loan.

Source: Credit.com, “My Co-Signer Filed for Bankruptcy. Will I Be Affected?,” Jeanine Skowronski, Nov. 02, 2015

– Why Hire Nicolet Law? –

Get An Experienced Lawyer On Your Case

We’ve helped thousands of clients with a wide range of legal needs. Let us put the skills and experience we’ve gained along the way to work for you!

Get Our App!

Get our convenient, secure app to
send us legal documents and pay your bill. Available on the App Store and Google Play.

Download the Nicolet Law Office app from the App Store to conveniently send documents and issue payments to our attorneys.
Nicolet Law clients can conveniently send legal documents and issue payments through our secure app. Get it on Google Play.

More Than

Million Recovered for our clients


Clients Helped

More Than

Years In business


Years of Combined Experience

What Our Clients Say About Us

powered by BirdEye

Awards & Recognition

Our peers and independent third-party organizations have recognized the hard work and dedication we put into every case. This has led to numerous awards and accolades.

From Our Blog

Halloween Safety Tips

There is no doubt that Halloween is going to look a little different this year. Typically enjoyed by people of all ages...

Step-by-Step Guide for Filing a Personal Injury Claim

Imagine that you are driving to the grocery store on a Sunday afternoon when another car suddenly strikes the left side of...

Lost Wages Assistance and Disability Benefits

The coronavirus and resulting economic crisis have left millions of Americans in financial distress, and individuals with...

Stranger Than Fiction: Only in Wisconsin

In 2016, the Wisconsin Supreme Court barred a woman from suing a state employee whose negligence resulted in bodily injury...