Legal Question in Real Estate Law in California

Re: How a bankrupt effects third party

It works something like this:

The credit bureaus follow bankruptcy filings. Somewhere in the papers filed by the bankrupt, the existence of the guaranty will show up. The credit bureaus know that the lender will shift its collection efforts from the borrower to the guarantor. Maybe they didn't even know about the guaranty before the bankruptcy. But now they know, and they know the creditor/lender will now be looking to the guarantor for repayment. Unless the guarantor is wealthy, the burden of satisfying his commitments under the guaranty will make him less creditworthy. So down go his scores.