If I file for bankruptcy, what happens to cosigners on my debt?

At the end of your bankruptcy case, your debts will be discharged (except for those that can't be discharged in bankruptcy, such as child support debt, back taxes, and most student loans). The bankruptcy discharge wipes out your legal obligation to repay the debt. However, it does nothing to protect your cosigners. If someone cosigned a debt for you, he or she will remain liable to repay it, even after your liability is discharged in bankruptcy.

If you file for bankruptcy under Chapter 13, you may be able to protect your cosigner. In Chapter 13, you must agree to a repayment plan to pay off some or all of your debts over time (three to five years). If you pay off the entire debt for which you have a cosigner through your repayment plan, your cosigner will be protected. While your bankruptcy case is proceeding, the automatic stay will prevent the creditor from taking action to collect the debt, whether against you or your cosigner. And, once the debt is paid off, there will be nothing left to collect. (If you pay back only part of the debt in your Chapter 13 plan, however, your cosigner will still be on the hook for the rest, even though your liability will be discharged once you've completed your plan).