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.
