Cosigning For Your Children

It is a wonderful, albeit a little sad, occasion when we send our children off into the world after they graduate. The world holds so many promises for them as they begin their careers, buy their first car, own a home and start a family. However, for kids who have not held a job or established credit while they were in school, it may be difficult to begin their new lives without having a cosigner in order to establish debt.

Bankruptcy and Cosigned Debt

If your child pays the payments on the cosigned debt on time each month, cosigning for kids is not a problem. However, if your child misses payments, the creditor has a legal right to look to you to repay the debt. If your child experiences a financial crisis that requires him or her to file bankruptcy, the debt will be discharged as to your child and the creditor is barred from collecting the debt from your child but your cosinginor’s obligation still survives.

However, parents cosigning for kids will be left to pay the cosigned debt because the parents’ legal liability for the debt is not discharged through the child’s bankruptcy case. If the parent is unable to pay the cosigned debt, it could ruin the parents’ credit. The creditor may choose to file a lawsuit to obtain a judgment against the parents if the debt is not paid.

Before cosigning for kids, parents and grandparents should discuss the legal responsibilities they will have if the kids default on the debts. In order to protect your financial stability, you should only consider cosigning for kids on debts that you can afford to pay if your child defaults on the loan. If you find yourself facing a financial crisis due to cosigned debts, call our Radcliff and Elizabethtown bankruptcy attorneys to discuss your bankruptcy options.

Grandparents or Parents Cosigning for Kids for Student Loans

Student loans pose an entirely different problem for parents cosigning debts for kids. Because student loans are not dischargeable in bankruptcy, if the child defaults on the student loan, the creditor will pursue the parents for payment of the debt. If the parents are unable to pay the student loans, filing a personal bankruptcy case will not discharge the student loans. The parents may face garnishments or other legal actions if the debt is not paid.

Experienced Bankruptcy Attorneys Serving Kentucky Families Since 1982

The bankruptcy lawyers at Musselwhite, Meinhart & Staples, PSC have been helping individuals just like you since 1982. We understand the stress, frustration and anxiety caused by debt problems and we offer hope to those struggling with a financial crisis. Bankruptcy offers you a fresh start to recover from your financial crisis to begin rebuilding your finances for you and for your family.

Call our office as 270-351-6032 or to schedule a free bankruptcy consultation with one of our bankruptcy lawyers. If you prefer, you can send a secure message through our online contact form and one of our helpful staff members will contact you to answer your questions about bankruptcy. We have offices in Radcliff and Elizabethtown and Louisville for your convenience.