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I co-signed on a loan for someone who declared bankruptcy. What happens now?
When you co-sign on a loan, you have legally agreed that you are responsible for the loan if the other co-signer is unable to pay or goes bankrupt. If your co-signer files for bankruptcy, you must take over the payments or your own credit rating will be affected for the worse.
Only co-sign on loan if you are able to pay off the debt in the event of a default. It may be less of a risk if you are co-signing on a small loan to help a friend or family member get a credit rating, but it is a bad idea to co-sign with someone who is already in financial trouble. Unless they have made real changes in their spending and income levels, you are probably going to end up paying off their debt
