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How will my proposed Ch 7 affect the person who signed for me a car?

Dothan, AL |

I filed Ch 13 a few yrs ago. After a while I could mot maintain the payments and it was dismissed, after which, my vehicle was repossessed. My lien holder is after me for the additional money owed (approx 8k), threatening garnishment, suing me, etc. I want to file CH7 and clear that debt. However, I have another vehicle that someone signed for me, I am on the title so I can insure it, but not the note. How will my proposed Ch 7 affect the person who signed for me a car? How will this affect the current loan, being that I am on the title only? Payments have always been on time and not late.

Attorney Answers 4


  1. Your new chapter 7 should not affect the co-signer on the separate vehicle so long as the payments on that vehicle remain current. If you are on the title, however, you need to be concerned about the value of the vehicle compared to what is owed on it. If more is owed than what the car is worth, than there should be no issue. If the car is worth substantially more than what is owed though, you need to be certain that you are able to exempt any equity. These are questions that should be answered by your bankruptcy attorney. If we can be of assistance, please give us a call.

    Best wishes!


  2. THe new C7 should not effect it at all.

    The previous information is solely for informational purposes only. If you have further questions, please contact an attorney in your area for more specific answers. Responding to your question in no way creates an attorney/client relationship, and none of the specific guarantees of privacy exist. If you have found this information helpful, kindly check the "helpful" box.


  3. If your name is not on the note for your current auto, filing a new chapter 7 should not affect the person who signed for you at all. However, I would recommend that you consider the value of the vehicle and whether or not you will be able to exempt this from your creditors. I would suggest that you discuss this with a reputable bankruptcy attorney in your area.


  4. As indicated by the other respondents, you do not need to list the debt associated with your current vehicle because you are not on the note. As long as you continue making regular payments, nothing negative will show up on the other person's credit report.

    But you do need to list the vehicle as an asset in your bankruptcy case. While you only need to protect (or exempt) your equity in the car (the difference between what the car is worth and what you owe on it), this could be a problem. If you owe more than the car is worth, you won't have to worry about exempting it. But if the car is worth more than you owe, you will have to exempt that amount.

    As a resident of Alabama, you are restricted to using Alabama's state-law property exemptions, which are very minimal. Beyond your clothing, books, portraits and pictiures (which are unlimited exemptions), Alabama Code § 6-10-6 only allows you to exempt $3,000 in other personal property. That $3,000 will have to cover all of your furniture and personal possessions as well as any equity in the car. If you cannot fully exempt the car, the bankruptcy trustee could take the car, pay off the loan, then use the rest of the proceeds (if any) to pay your creditors. Meanwhile, you'll be out of a car.

    To make sure that you are not putting your friend's credit in jeopardy and are not at risk of losing your car, you should consult with a local bankruptcy attorney.

    Good luck!

    If you found my answer useful, please check it as "helpful" here on Avvo. Answers to questions on Avvo are for general informational purposes only. Proper preparation of a bankruptcy case involves many factors and variables, and may lead to a different answer than that given here when all the facts are taken into consideration. The fact that a general question was answered on Avvo does not establish an attorney-client relationship; that only happens when both you and I sign a formal contract and a retainer is paid and collected

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