Questions and Answers About Co-Debtors

Have you ever had a co-signer for a lease, house, car purchase or student loan? Do you have a joint bank account with a parent, child or spouse? The need to protect any current co-signers can be a leading factor not only in whether you file for bankruptcy, but what type of bankruptcy you choose. During this careful decision process, there are many things to consider regarding co-signers.

If you and your spouse co-signed for a home, he or she will only be exempt from pressuring from creditors if you file for a joint bankruptcy. This does not apply if you’re filing but they are not. Your spouse as a co-debtor can be held responsible for at least partial payment of the debts in question.

If you’ve opened a joint bank account with an elderly parent or a grown child, Michigan law assumes that half of the funds, if called into question, belong to each person. To deter this, one must properly explain the circumstances in court, and provide proof that none of the supposed half belongs to them. Judges recognize that every bankruptcy case is different, and will give due consideration to the specifics of your case.

In Michigan, the only type of bankruptcy likely to protect a co-debtor is Chapter 13. Chapter 13 allows a Co-Debtor Stay, which protects your co-signer from creditors for as long as the case is open. It applies only to consumer debts and excludes those accrued through the average course of business.

Depending on the details of your bankruptcy, the co-debtor stay can be lifted for a number of reasons, including but not limited to your refusal to pay off your debts in a timely manner. A creditor must get permission in court to lift a stay, and pursuing the co-debtor without doing so can result in fines for the creditor.
If your Chapter 13 bankruptcy becomes a Chapter 11 or Chapter 7, the co-debtor stay no longer applies.

It can be difficult to discern in every case whether your co-signers will be affected by your filing for bankruptcy. If you’re considering moving forward with your bankruptcy and require clarification regarding your co-signer or joint bank account, contact us with any questions.

The Advantages to Hiring a Detroit Debt Law Firm

Debt law can be tricky business. When you owe somebody a large amount of debt, laws may be broken by the lender or the collections agency that you may not even be aware of. Hiring a Detroit debt law firm may be a good idea to aggressively counter the actions of the collections agency, who are known for being deceptive and very aggressive in their collections tactics.

Before you call a firm, however, understand that nothing can be done while your account is current. If you are making your payments every month, no company will negotiate with you. Negotiating your debt is impossible if you are making your payments. After all, the lender wants you to keep making minimum payments. The point of the settlement is to save years and thousands of dollars in interest. In order for them to be willing to settle with you, you will need to show that you are not able to pay back the debt in full. Only then will a company begin to talk with you.

While going through this process, start socking as much money away as possible. Any good Detroit debt law firm will tell you that you need to have a bulk sum available to negotiate with. If you can tell the collector, “I owe $3,000, but I have $1,000 in cash – can I settle it with that?”, you are in much better shape than those who call and say, “I can’t afford the payments. Can we cut a deal?”

And the most important advantage of them all is that you will be able to dig yourself out of debt quicker. This will clean up your credit report and start giving you access to the benefits of good credit once again. Start calling around and find your Detroit debt law firm now – if you need one.