Legal Question in Bankruptcy in Texas

Re: Cosigner and bankruptcy

Short answer -- In my opinion it is likely your father's credit would not be effected.

Most people who I counsel decide to keep their cars and continue to make their monthly car loan payments. There are other options as well and there is some strategy involved. I will assume you wish to keep your car. If you filed under Ch. 7 you would be eligible to file a document in your case called a "reaffirmation agreement". Basically this document states that you will continue to acknowledge and pay your car loan obligation. In turn, you would keep the car. Provided these steps were taken, your father's credit really would be unaffected -- since YOU ARE STILL MAKING THE CAR PAYMENT. If you wanted to get rid of the car and the car loan (which is an option) your father's credit would come into play. Your father would not have to receive a notice of the bankruptcy and if you file the reaffirmation agreement he would probably never know about it.

My experience tells me that many people can and do get approved for new auto loans. The most problematic aspect of the bankruptcy filing is that you will have to pay a high interest rate. I advised my clients to purchase a "new" car (and loan) that is 2-3 years old. Consumer Reports magazine is a excellent source for information on the best makes and models in terms of value. Of course, many clients decide not to take my advise and they are able to get a brand new vehicle financed through a dealership -- most dealerships have special programs for bad credit and bankruptcy.

Re: Cosigner and bankruptcy

Short answer -- In my opinion it is likely your father's credit would not be effected.

Most people who I counsel decide to keep their cars and continue to make their monthly car loan payments. There are other options as well and there is some strategy involved. I will assume you wish to keep your car. If you filed under Ch. 7 you would be eligible to file a document in your case called a "reaffirmation agreement". Basically this document states that you will continue to acknowledge and pay your car loan obligation. In turn, you would keep the car. Provided these steps were taken, your father's credit really would be unaffected -- since YOU ARE STILL MAKING THE CAR PAYMENT. If you wanted to get rid of the car and the car loan (which is an option) your father's credit would come into play. Your father would not have to receive a notice of the bankruptcy and if you file the reaffirmation agreement he would probably never know about it.

My experience tells me that many people can and do get approved for new auto loans. The most problematic aspect of the bankruptcy filing is that you will have to pay a high interest rate. I advised my clients to purchase a "new" car (and loan) that is 2-3 years old. Consumer Reports magazine is a excellent source for information on the best makes and models in terms of value. Of course, many clients decide not to take my advise and they are able to get a brand new vehicle financed through a dealership -- most dealerships have special programs for bad credit and bankruptcy. Please call me to discuss your specific situation. ph. (972) 231-5500 or (800) 303-0720

Re: Cosigner and bankruptcy

More than likely, your father's credit history will reflect the event, and he will want to explain the matter to the reporting credit agency. Since he is a cosigner, he will have to be listed in your bankruptcy, so he will be notified. As far as your ability to purchase a new car WELL AFTER you have been discharged from bankruptcy if you are filing under Chapter 7, there are widely varying reports on how uninterested car dealers are in your bankruptcy. Some don't care, some want to see at least 3 years of steady employment/credit, etc.