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Will My Friend that Cosigned for My Motorcycle Be Stuck With My Debt When I Go Bankrupt? – Tommy

Tommy

“Dear Steve,

Currently have two accounts opened with Honda Card Services, financed through GE. On one of the cards I was charged for a motorcycle which later got stolen (No gap, no insurance), and the other card was used for maintenance of the bike (oil changes, etc). Both cards were co-signed with one of my close friends and I was considering filing for bankruptcy seeing that I recently lost my job and falling behind payments.

Is there anyway I can remove my friend as a co-signer now? Or will he be stuck with the full debt after I file for bankruptcy?

Tommy”

Dear Tommy,

When you go bankrupt your friend will be completely responsible for the debt you can’t pay. This is why I never suggest that anyone cosign any debt. People do it because they want to be good friends and want to help but the downside risk is huge to them. Your late pays or bankruptcy will harm their credit report. Not the kind of outcome you want from helping a friend.

And don’t even ever think of asking me to cosign anything, I never will.

The reason that the bank required a cosigner was because your credit sucked and if you defaulted they wanted someone that was a lower risk to go after. And that’s just what they will do.

Your only chance of making this better would be to give your friend the monthly payments after your bankruptcy. Otherwise, don’t expect to be friends for long.

Steve

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About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

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