Post # 1
hi Legal Bees
Quick question in regards to a cosigner on a home loan. My mother, who thought she was doing the best thing at the time, cosigned a home loan with her cousin (against my advice to do so). Now this cousin has hit hard times. She has tried to refi to take my moms name off, but to no avail and has now resorted to filing for bankruptcy.
My question is, how is that going to effect my mom and her credit? She has worked so hard for so many years to get her credit cleaned up and back on track. Now I am worried that this is going to drag her back down again.
Post # 3
I’m no expert on finance, but two things. 1) I don’t think that her cousin’s bankruptcy will impact her. 2) Your mom will be on the hook for the house.
The cousin’s bankruptcy will not discharge the loan. Does she have other creditors coming after her? If not, she should probably try to work it out with your mom. Can the cousin pay part of the loan and your mom the other part? That might best protect their interests. It stinks, but if your mom keeps the mortgage paid, it will really help her situation.
Post # 4
Some of what I do as an attorney is collection work. I don’t know the specifics of how much this will affect your mom’s credit rating, but it definitely will. I can say that she will not be as negatively affected as her cousin will, because your mom is not the one filing for bankruptcy. However, since your mom is a co-signer, she is liable for the default on the loan and they could go after her for the amount due.