Bankruptcy: Co-signing on a Loan Has Its Risks

Many individuals in Ohio and across the nation may consider it vital take all the necessary measures to protect their financial futures. However, there are some circumstances in which another person’s actions could leave a person facing dire financial straits. For instance, one who co-signs on a loan may take on a certain level of risk in the process, and if the other party fails to make the necessary payments, the situation could leave a person in search of relief through outlets such as bankruptcy.

While the concept of helping another party qualify for a loan to buy a car or become eligible to rent an apartment may appear noble, there are certain risks involved. Even if the other party agrees to make the payments, the co-signer still takes on a certain amount of responsibility in the process. Should payments fall behind, the impact it can have on the credit scores of both parties could be substantial.

When payments fall past due, co-signers may also begin to receive calls and letters from collection agencies, and dealing with collectors can be a stressful process. In addition, should the other party have the debt discharged by filing for bankruptcy, creditors may still seek to hold the co-signer responsible for the remaining balance. Those who find themselves facing a similar scenario may experience dire financial straits as a result, and they might be uncertain of all their available options for relief.

Dealing with substantial amounts of debt can be a stressful and daunting experience. Those who are suffering under the weight of substantial monetary obligations could benefit from seeking guidance on how to develop a strategy to reduce or eliminate debts by consulting with a bankruptcy attorney. An attorney can help a client in Ohio make informed decisions about his or her situation and assist in choosing the correct path with which to pursue financial relief.