Chapter 7 and Cosigner

• In the moment you file your petition for Chapter 7, an automatic stay of creditors is placed. This means that while you are in the process of bankruptcy, your creditors cannot demand payments of your debts until the court either approves or dismisses your case. When you are approved by the court, your debts are erased and you receive the discharge. After this moment, no creditors can demand any payments from you and you are no longer liable to pay them. It is not the same for your cosigner, however. If you have a cosigner for any of your loans or debts when you file for Chapter 7, once you receive the discharge, your creditors are allowed to call your cosigners and demand payment of anything that has not yet been paid.
  
  

Cosigner Protection

• To be under the same protection against creditors that you are, your cosigners must also file for Chapter 7 to not be liable for your debts any longer. Only if they too file and their case is accepted are your creditors not allowed to demand payment from them (or you). The fact that you were approved for a Chapter 7 filing, however, does not mean that your cosigner will also be approved. He must meet the requirements of eligibility for Chapter 7 to be able to file. He must also reaffirm all debts he does not want to include in the bankruptcy. (To reaffirm is to write a letter of commitment to pay some debts by yourself and not include them in the filing.)
  
  

Chapter 7 Requirements

• For a cosigner to be able to file for Chapter 7, he must also meet eligibility requirements. A Chapter 7 filing requires the debtor's income to be lower or equal to the average income for his state. If this is not the case, the debtor can show that his expenses are so high that, even if he has a reasonable income, his expenses use most of it. He is also required to receive credit counseling from an approved agency within at least 180 days before filing. If your cosigner has a good income relative to his expenses, he might not qualify for Chapter 7. In this case, he could consider a Chapter 13 filing.
  
  

Warnings

• Besides the effect that bankruptcy would have on any cosigners you might have, your filing also has negative impact on you. The price to erase your debts and your liability to them is that you might lose many of your assets and pieces of property that are not under exemption laws. Bankruptcy leaves a negative effect on your credit score that can last for at least 10 years from the moment you file.