I want to file Chapter 7 and have a car that was co-signed by a relative. If I am no longer able to make the payments and they aren't either, can I list this on my bankruptcy filing?
-- Kim
A.
You can certainly discharge your liability on a car loan in a Chapter 7; however, your bankruptcy will not protect a co signor from his or her liability on the debt. The car lender will remain free to attempt collection from the co signor.
In Chapter 13, the debtor is permitted to treat a cosigned loan differently from the debtor's other debts, and pay the cosigned debt in full. This allows the debtor to protect those who co signed debts.
