I Have A Dirtbike That A Friend Cosigned For. He Is Declaring Bankruptcy. Will This Affect Me And My Credit?
I have a dirtbike that a friend cosigned for. He is declaring bankruptcy. Will this affect me and my credit?
I am the main owner on the bike and I have made every payment. The bike is in my name and he is strictly the cosigner. He wants to declare bankruptcy and I am about to go in escrow on a house. I want to make sure that him declaring bankruptcy will not affect my credit because of this bike… If it will, what can I do??
Tags: bankruptcy, Cosigned, Declaring, Dirtbike, For., Friend, Have, That, This, Will
November 19th, 2009 at 11:23 am
More than likely it will not be an issue. It really only becomes one when you fail to make a payment – then they go after the co-signer for their money. It should have absolutely not effect on your credit rating unless your co-signer is a spouse, a dependant or living in the same house. You might find however embedded somewhere in the legal fine print a requirement to notify the lender should any material changes in circumstances occur. The lender will then evaluate whether you are good to continue on your own – sufficient payment history, or the agreement is to be terminated. If it does come back to haunt you though, you could always line up another co-signer acceptable to the lending institution or if that’s no good you may have to re-finance but that would be like a worst case scenario.
November 19th, 2009 at 11:52 am
Sorry to hear about your friend. If he cosigned for you, your credit doesn’t come into play normally, his does. If he defaulted on the payments because you didn’t make them, his credit would be hit not yours.
The bike could be called for, through the Bankruptcy process a valuation of the bike will more then likely be made and it maybe determined at that time to recall it or not.
Are you in a position to pay for it out right yet, or can you get another private loan to pay for it to get it out of the cosigned position?
November 19th, 2009 at 6:20 pm
No. A co-signer is mostly there to raise your credit score during the approval process so you can get a lower interest rate. But if the loan company finds out that you’re co-signer is filling bankruptcy they can raise your interest rate because, now you are a high risk for default and their is no one there to catch the fall if you should default.