Bankruptcy Hawaii and Co-Signed Debt
Money regrets. Who doesn’t have them? Among the poor and even among the rich, not to mention everyone in between, you’ll find that each person has more than a few. Some can be remedied.
What does it mean
When 2 or more people owe on the same debt they both owe 100% of the debt.
Example
Kimo and Kelli borrow $10,000 from Bank of Hawaii. They both sign the contract. The fiendly banker gives Kimo $1,000 and Kelli $9,000. For some reason the debt isn’t paid. Bankoh sues Kimo and Kelli. They both go to Court. Kimo brings $1,000 and hands it to the Bankoh lawyer. He thinks he is done. Pau. Nope. He owes it all. He cosigned the debt. Each cosigner owes 100%. If Kimo pays the whole debt he may have claim aginst Kelli for th $9,000. But he and Kelli both agred that they each owe it all.
Know before you co-sign
IIf you can avoid it don’t ever co-sign a debt unless you are fully willing to pay it all back yourslef if the “primary” for whatever reason does not. When you co-sihn you it all too.
What if 1 co-signor files bankruptcy?
If one cosigner files bankruptcy then it does not hange that the other co-signer still owes 100% of the debt. The only thing that changes is that the bank now only has 1 fish on the line. If Kelli files then Kimo still owes. Kimo owed 100% before Kelli filed. Nothing has changed between Kimo and Bankoh. The change is for Kelli– she does not owe the debt. And the change is for Bankoh– they can now only pursue Kimo.
Is there any good news for Kimo?
There is good news. Kelli could file a chapter 13 bankruptcy and request the co-signed debt be paid first and in full. It works like this. Kelli owes $10,000 to Bankoh and has another $40,000 in credit cards and loans. Becuase the $10,000 owed with Kimo to Bankoh is a joint consumer debt a plan can be made in which over 3 to 5 years Kelli pays off that loan and only that loan. She can eliminate the other $40,000.
Know before you sign
Our advice: Think hard, very hard, about co-signing a loan or asking a friend or relative to be a co-signer. But if transaction has already happened and gone sour, know that the Bankruptcy Code offers protection and a way out to both the primary borrower and co-signer.
Don’t go it alone- Get the advice you need!
Call us today at 808-585-1000 for a free no obligation consultation.
Dump the debt and get a fresh start.
Call us today at 808-585-1000 for a free no obligation consultation. Dump the debt and get a fresh start.
The Law Office of Edward D. Magauran files bankruptcies from our Honolulu office on all the Hawaiian Islands, Oahu, Big Island, Maui and Kauai. Find out what we can do for you today!