It’s generous to help someone buy a car or pay for college—whether that’s your child, a family member, or a friend. Unfortunately, being a loan cosigner doesn’t protect you from the creditors. If debt collectors can’t get money from the loan’s signer, they’ll come after you, the cosigner, for payment. This may put you at risk for bankruptcy if you get overwhelmed by the debt the main signer can’t pay.
Eventually, that could lead to creditors filing a lawsuit against you.
What is a Loan Cosigner?
A loan cosigner is someone who stakes their reputation on another person by cosigning an agreement on that person's behalf, taking responsibility for a loan (lease, contract, etc) if the person you vouch for does not make their payments as scheduled.
Why Am I Being Sued as a Loan Cosigner?
It’s usually because creditors can’t locate or contact the loan’s signer. If no one can get in contact with the other signer, that leaves you—the loan cosigner— responsible for the payments.
Protect Yourself From Lawsuits
So, if you’re in this situation, what can you do to protect yourself? You only have a few options:
- Pay it.
- You can choose to pay it all at once or to set up a payment plan.
- You can choose to pay it all at once or to set up a payment plan.
- File a bankruptcy.
- This will discharge your debts, including the loan you cosigned.
- A bankruptcy will discharge past due rent, a car loan, and a mortgage (among other things) so long as you don’t have possession of the property or you’re willing to give it up.
- A bankruptcy will discharge past due rent, a car loan, and a mortgage (among other things) so long as you don’t have possession of the property or you’re willing to give it up.
- This will discharge your debts, including the loan you cosigned.
- You cannot discharge a student loan with bankruptcy. The only way to get rid of this type of debt is to pay it.
No one wants to feel like they’re being punished for being generous to a friend or family member by cosigning on their loan. Sadly, cosigning exists to ensure loan owners still get paid even if the main signer can’t pay the bill.
Our Nebraska Bankruptcy Attorneys Can Help
Being sued, especially unexpectedly, can be scary. If you’ve been sued and you’re not sure if you can pay the loan back or make any payments, call Steffens Law Accident Injury Lawyers at (308) 872-8327. Our Nebraska bankruptcy attorneys will walk you through your options and discuss whether bankruptcy may be right for you.