What Happens to My Cosigner If I File Chapter 7 Bankruptcy?

Chapter 7 eliminates your personal obligation on most cosigned unsecured debts, but it does not remove the cosigner's legal responsibility.

Common cosigned debts that your Chapter 7 discharge usually wipes from your ledger:

• Credit card balances on accounts you cosigned.
• Medical bills and unsecured personal loans.
• Payday or small-dollar unsecured loans cosigned by someone else.
• Retail store accounts and unsecured lines of credit.
• Some unsecured business loans when you signed personally.

Secured loans (auto, mortgage) can discharge your personal liability, yet the lien stays with the property unless you redeem or reaffirm; see 11 U.S.C. §722 redemption for details. If you surrender collateral or it is repossessed, a deficiency balance may remain; creditors can pursue the cosigner for that shortfall.

Not wiped out by Chapter 7 (common nondischargeable buckets):

• Domestic support obligations, including child support and alimony, per federal rules.
• Most recent income taxes and certain tax penalties, see 11 U.S.C. §523 nondischargeable debts.
• Student loans, except in rare undue hardship cases.
• Debts incurred by fraud, embezzlement, or willful misconduct.
• Certain government fines and restitution.

Practical tip: verify which accounts actually list a cosigner before filing by pulling all three credit reports at AnnualCreditReport.com, and review basic bankruptcy steps and timelines at the court's guide, Bankruptcy Basics.

Yes, your Chapter 7 discharge does not shield a cosigner from the creditor's separate contract with them. Federal law, specifically 11 U.S.C. §524(e) explanation, makes clear the debtor's discharge cancels the obligation of the filer only, it does not automatically erase the cosigner's independent liability. Creditors may still sue or demand payment from the cosigner because their contract remains intact, unless the creditor agrees to release the cosigner or a court order says otherwise. If you sign a reaffirmation agreement you remain liable too, because reaffirmation recreates the original obligation.

Practically, creditors often ignore cosigners when the account stays current after discharge, but late or charged-off accounts increase the chance of collection actions against the cosigner. If you worry about reporting errors, have your cosigner check credit reports for incorrect bankruptcy entries; a cosigner's file should not show that their account was 'included in bankruptcy' for you. Consider contacting the creditor to request a cosigner release, negotiating payment terms, or consulting a bankruptcy attorney to evaluate risks and options for protecting both you and your cosigner.

Creditors can pursue your cosigner right after you file Chapter 7 because the bankruptcy stay protects only you, not the cosigner. First, Chapter 7's protection for the debtor is the 11 U.S.C. §362 automatic stay, which bars collection against the filer only. There is no parallel co-debtor shield in Chapter 7, so lenders may demand payment, report delinquencies, or sue the cosigner immediately.

Typical timeline creditors follow after you file:

• Billing cycle ends, lender posts missed payment and may report late status to credit bureaus.
• Account moves to 60–90 days late, servicer increases collection pressure on cosigner.
• Lender may accelerate the debt if the loan terms allow, making the full balance due.
• If unpaid, creditor can file suit against the cosigner, seek judgment, levy bank accounts, or garnish wages where state law permits.
• Judgment can lead to liens on cosigner property or post-judgment collection actions.

If you want to protect your cosigner, act before default or immediately after filing. Consider keeping payments current while you complete bankruptcy steps, or arrange a short-term forbearance, payment plan, or refinance so the cosigner is not left holding the balance. If you need the legal basis for co-debtor protection in a different chapter, see the 11 U.S.C. §1301 co-debtor stay, which applies in Chapter 13 but not in Chapter 7.

Yes - if your cosigner pays after you file, they can sue you for contribution, but your personal obligation to the original debt is usually wiped out in Chapter 7. A cosigner who steps in typically acquires a contingent prepetition claim against you that Chapter 7 discharges unless you reaffirm the debt. See the statutory definition of a bankruptcy claim for context via definition of "claim" in bankruptcy.

There are important exceptions where a suit can survive or be independent of discharge. A written promise you make after filing, deliberate fraud or intentional torts, and most domestic support obligations are not dischargeable, so a cosigner's recovery can proceed under those theories; federal exceptions are summarized in exceptions to discharge under §523. If your cosigner sues on a post-petition written promise, that is contractually new liability, not revival of the old debt. Voluntary payments by a cosigner after discharge do not automatically reinstate your discharged obligation.

Keep communication calm and papered. If a cosigner offers to pay, insist the lender document any subrogation or reimbursement arrangement in writing with the creditor rather than an informal side agreement with you. Save emails, demand receipts, and consult a bankruptcy attorney before signing anything that could create new personal liability. This protects both you and the person who backed your loan.

Filing Chapter 7 does not automatically put the bankruptcy on your cosigner's credit report, but missed payments and charge-offs on the shared account will still show and can damage their score.

• Keep the account current; payments on time protect the cosigner's record.
• If you plan to reaffirm and continue paying, ask the creditor to suppress negative reporting about the bankruptcy while you perform.
• If the lender reports a bankruptcy notation on the cosigner's file, dispute it under the FCRA promptly using the CFPB dispute guide to correct errors.
• Pull all three credit reports yearly to verify no bankruptcy appears on the cosigner's files via free annual credit reports.
• Set up autopay and low-balance alerts so payments never slip, protecting both of you.
• If the account goes into default after your discharge, the creditor can pursue the cosigner for the full balance; notify the cosigner immediately and explore settlement or payment arrangements.
• Keep written records of communications, payments, and any agreements so the cosigner can dispute or defend their credit if needed.

Start by treating your cosigner like a teammate, not collateral; act early to limit their legal and credit exposure.

• Bring the account current and keep paying, even if you plan to file. A current payment history reduces immediate collection risk and lender incentives to pursue the cosigner.
• Refinance the loan into only your name if you qualify, removing the cosigner outright. This is the cleanest solution when affordable.
• Consider Chapter 13 to obtain a co-debtor stay under §1301 co-debtor stay, which can bar creditor collection from your cosigner while you repay.
• Negotiate a written cosigner release with the lender before filing. Get it in writing and verify the lender will not pursue the cosigner after discharge.
• Plan reaffirmation only when the payment, interest, and your budget clearly support it; see official guidance at Reaffirmation basics and forms before signing anything.

Be cautious, because some choices trade one risk for another. Filing Chapter 7 may discharge your personal obligation, but it does not automatically erase the cosigner's liability unless the creditor also agrees. Reaffirmation binds you again to the debt, so evaluate monthly cost, loan term, and interest.

Redemption applies for vehicles with low market value, learn the mechanics at Section 722 redemption. Always get agreements in writing and keep records.

• Audit credit reports for both you and the cosigner before filing, dispute errors that misidentify or continue reporting the debt after discharge.
• If the cosigner is a spouse or family member, discuss emotional and legal consequences openly and consider professional mediation.
• Document every lender conversation and settlement offer, save written releases and signed reaffirmation or refinance paperwork.

You can often free a cosigner after your Chapter 7 discharge, but it usually requires a deliberate post-discharge action rather than automatic release.

First, refinancing into only your name is the cleanest route. Lenders want steady on-time payments, a lower debt-to-income ratio, and sufficient income or equity for auto loans. Expect a hard credit pull, possible higher APR if your score is still rebuilding, and paperwork: pay stubs, tax returns, vehicle title or payoff statement. Novation or a formal cosigner release is next, when a lender offers a program to swap liability without a new loan. These releases are lender-specific and rare; get written confirmation if approved. Payoff or settlement closes the account and removes risk to the cosigner, but it costs money up front. For cars, trade-in or replace the loan by refinancing the new vehicle in your name. For credit cards, ask the issuer to remove the cosigner, convert the account to a sole account, or open a new secured card under your name to rebuild revolving credit.

Timing and documentation matter. Wait until you have steady on-time payments post-discharge and check your rebuilt credit scores before applying. Prepare ID, discharge papers, proof of income, current statements, title or payoff letters, and the lender's release form. Watch traps: hard inquiries, temporary APR increases, higher required down payment, or denial that leaves the cosigner exposed.

Options to remove or release your cosigner:

• Refinance the loan solely in your name (cleanest, requires credit eligibility)
• Request lender novation or formal cosigner release (rare, needs written approval)
• Pay off or settle the debt to close the account (immediate removal)
• Trade-in or replace an auto loan and title in your name (uses equity or down payment)
• Convert joint card to a sole account or open a secured card in your name
• Obtain lender's written release after consistent post-discharge payments
• Provide proof of discharge and apply when your rebuilt credit meets lender thresholds

If you file Chapter 7, the lien on property securing a cosigned loan generally survives your discharge, so the lender keeps the right to the collateral even if your personal debt is wiped out. This means the secured asset can be repossessed or foreclosed regardless of your bankruptcy discharge, and your cosigner can remain fully exposed if the lender pursues deficiency claims after repossession.

• Reaffirm and keep: you or the cosigner sign a reaffirmation agreement, preserving the original loan terms and keeping the cosigner liable.
• Redeem and keep: pay the lender the collateral's current value in a lump sum to keep the property, which may involve Section 722 redemption rules, and the cosigner stays liable until paid.
• Ride-through: in some venues you may keep paying the original loan and keep the collateral without reaffirming; the lien remains, so the cosigner stays on the hook for future defaults.
• Surrender: give up the property, lender repossesses or forecloses, and the lender may seek a deficiency judgment against you and the cosigner if the sale leaves a balance.

Also watch cross-collateralization where one loan secures multiple assets, common with credit unions, which can widen exposure for a cosigner. Total-loss or collision insurance payouts may satisfy a secured claim, but gaps can create deficiencies that the lender can pursue against a cosigner. For practical next steps and court basics see the Bankruptcy Basics guide.

If your cosigner is your spouse or a co-borrower, the legal and practical effects differ sharply, so know which role they hold before you act.

Community-property nuance and quick definitions:

• Cosigner versus co-borrower: a cosigner guarantees payment but lacks ownership rights; a co-borrower shares both liability and ownership of the underlying loan or property.
• Community-property effect: in community-property states, your Chapter 7 discharge can protect post-petition community obligations from being enforced against community assets under 11 U.S.C. §524(a)(3) protection, but it does not shield your spouse's separate property.
• Community-property states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, Wisconsin.

Decision paths to consider: file jointly with spouse to remove joint liability; file solo then refinance or get a release to clear the spouse's risk; choose Chapter 13 if you need the co-debtor stay to pause creditor collection against a non-filing spouse.

Practical effects and next steps:

If your spouse cosigned and you get a Chapter 7 discharge, creditors can still pursue the spouse on the original contract unless you used a joint filing or refinance. If your spouse is a co-borrower on titled property, bankruptcy won't automatically transfer their ownership, but liens may remain and refinancing or lien release is often required.

Talk to a bankruptcy attorney about joint filing, refinancing options, or using Chapter 13 for a co-debtor stay, and discuss how community-property rules apply where you live.

Filing Chapter 7 wipes your personal legal duty but often leaves the cosigner vulnerable, so expect five real-world outcomes that range from no impact to major liability.

1. Unsecured personal loan: What happened - borrower discharged the debt, creditor sued the cosigner and obtained a judgment. Why it happened - unsecured loans are fully collectible from cosigners once the primary borrower is discharged. How to prevent - negotiate a pay‑off or settlement with the creditor before filing, or get the cosigner to sign a written forbearance that stays enforceable after discharge.
2. Auto loan with reaffirmation: What happened - borrower reaffirmed the car loan in bankruptcy, stayed on the title, and continued payments; cosigner remained on the hook but no collection action occurred. Why it happened - reaffirmation legally preserves the contract despite discharge, so creditors keep the original rights against cosigners. How to prevent - consider reaffirmation only if you and the cosigner can commit to payments, or refinance the loan into the cosigner's name before filing.
3. Auto loan with surrender and deficiency: What happened - borrower surrendered the car, lender sold it at auction, pursued the cosigner for the remaining deficiency balance. Why it happened - surrender eliminates the secured collateral but not the underlying deficiency, which remains collectible from cosigners. How to prevent - arrange a voluntary surrender with a negotiated deficiency waiver, or have the cosigner demand a formal settlement before you file.
4. Private student loan with cosigner release program: What happened - borrower qualified for a cosigner release after steady payments post-discharge, cosigner was removed and liability ended. Why it happened - some private lenders allow release after meeting payment and time conditions, and they enforce that promise even after a bankruptcy discharge if contract terms allow. How to prevent - if possible, meet the lender's release terms before filing, or arrange a cosigner release clause in writing ahead of time.
5. Joint credit card closed: What happened - card issuer closed the joint account after discharge, reported late payments and the cosigner's score dropped, no lawsuit followed. Why it happened - creditors can close accounts and report account history for joint accounts, harming cosigner credit even when they are not sued. How to prevent - request account separation before filing, move balances to a new account in your name only, or secure a written agreement from the issuer to freeze reporting during negotiations.

Do proactive credit‑file reviews, negotiate settlements or reaffirmation terms with creditors, and right‑size or refinance payments for any cosigner before you file to minimize these outcomes.

Filing Chapter 7 discharges your obligation, but it typically does not remove the cosigner's legal responsibility for the loan.

Does Chapter 7 stop collectors from contacting my cosigner?

Yes, your filing triggers the automatic stay under §362, which halts creditor collection against you, not necessarily your cosigner. Creditors can keep pursuing the cosigner unless the lender agrees to stop, the debt is reaffirmed, or a court orders otherwise. Communication rules still limit abusive contact.

Will reaffirming a loan protect my cosigner?

Reaffirmation can keep the loan on your terms and may shield the cosigner from lender action because you remain personally liable. Reaffirmation must be voluntary, court-approved, and explicitly preserve creditor rights, so weigh long-term credit impact and consult counsel before signing anything.

Can I switch to Chapter 13 to shield my cosigner?

Chapter 13 offers a potential co-debtor stay, codified as the co-debtor stay in §1301, which can temporarily block collection from a cosigner while you repay under a plan. That protection depends on the debt type and plan terms, and it requires committing to a repayment schedule for three to five years.

How does my bankruptcy show up on my cosigner's reports and what can they do?

Your discharge won't appear on the cosigner's credit as your bankruptcy, but account status and missed payments will. For guidance on reporting and disputes see the CFPB credit reports guidance. Cosigners can dispute inaccuracies, negotiate payment options, or seek refinancing to remove their liability.

Pull updated credit reports for both of you and plan timing before you file.