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Can I file bankruptcy to rid myself of the responsibility to pay an auto loan? The cosigner drives the car and makes the pymts.

Detroit, MI |

When the loan was drafted, I was under the impression that my niece would be listed 1st on the auto loan not me. She is listed as the cosiger and drives the car. The car is in her possession. The insurance is in my name only because she failed to keep the auto insured. If I were to file bankruptcy, would the financial obligatioin become hers soley? She is very delinquent with the payments.

Attorney Answers 4


  1. Filing Bankruptcy has some very serious financial consequences and I wouldn't recommend that you file just to remove the responsiblity to pay this debt. If you have other debts, it might be worth considering, and I would recommend that you consult with a bankruptcy attorney in your community.

    It just goes to show you that there is never any upside to co-signing a car loan for someone!


  2. If you were to file for bankruptcy, and assuming that no creditor or party in interest objects to your discharge or dischargability of the auto debt, you would be discharged of all your debts, including the auto loan. Your niece would stil be liable and the bank would have the right to repossess the car. Best of luck, Barbie Lieber

    Barbie Lieber, Esq.
    Lieber & Lieber, LLP
    60 East 42nd Street, Suite 2102
    New York, NY 10165
    212-949-5586
    www.lieberlegal.com

    The foregoing is for informational purposes only and does not create and attorney client relationship.


  3. The short answer is yes. However, as noted, there may be reasons why you would not want to file. Since she needed a co-signer I assume your credit was much better than hers. Unless there were other reasons to file, such as your own unsecured debt, or a need to make up mortgage payments or strip a second mortgage fiing just for the co-signed loan would probably be a bad idea.


  4. Well, yes if you file bankruptcy it will remove your obligation on this loan. However, this alone wouldn't be a reason to file at this time.

    If she is in jeopardy of repossession, you should discuss the situation with her, and persuade her to put the car in your possession. Make the payments to avoid the repo, and put the car up for sale. Even if you can't sell it for enough to pay the loan in full, it will be more than if it is sold after repo.

    If you have other reasons to file bankruptcy, then it may make sense for you to do so.

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