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What happens to my mortgage responsibility if my daughter files for bankruptcy?

What happens to my mortgage responsibility if my daughter files for bankruptcy?

Q: What rights does a co-signer have on a mortgage?

A co-signer has the right to receive information about the mortgage account, including payment history and any changes to the loan terms. However, co-signers do not have ownership rights to the property unless specified in the mortgage agreement. They are primarily responsible for the loan if the primary borrower defaults.

Q: How long does a co-signer have to stay on a mortgage loan?

A co-signer remains on the mortgage loan until the loan is paid off or refinanced. There is no set time limit; their obligation continues as long as the mortgage exists. If the primary borrower wishes to remove the co-signer, they must refinance the loan in their name only.

Q: What power does a co-signer have on a mortgage?

A co-signer can influence the mortgage approval process by enhancing the primary borrower's creditworthiness. However, they do not have decision-making power regarding the property or loan terms unless stated in the agreement. Their main role is to assume financial responsibility if the primary borrower fails to make payments.

Full question:

I am a co-signer for my daughter on a fixed home loan mortgage in Nevada. Daughter has taken all financial responsibilty for the loan and has been making all pmts on the loan for several years. My daughter is now considering filing for chapter 13 bankruptcy. If she does, what is my responsibility regarding the mortgage loan? would I be responsible for the existing loan payments? If so, it would be a financial disaster for me; I am retired and 68 yrs old.

Category: Debts and Credit
Subcategory: Cosigning
Date: 04/07/2025
State: California

Answer:

As a co-signer, you are legally responsible for the mortgage loan if your daughter defaults, regardless of her financial responsibility. If she files for Chapter 13 bankruptcy, her bankruptcy does not discharge your obligation to pay the loan. Creditors can still pursue you for any unpaid balance after her bankruptcy discharge.

During her Chapter 13 repayment plan, actions by creditors against you may be temporarily halted, but this does not eliminate your responsibility. If she completes her repayment plan, creditors can still seek any remaining balance from you.

In essence, unless your co-signing agreement specifies otherwise, you remain liable for the mortgage payments even if your daughter files for bankruptcy. It's crucial to seek legal advice to understand your specific obligations and rights in this situation.

This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.

FAQs

How long before you can remove a co-signer from a mortgage?

Removing a co-signer from a mortgage typically requires refinancing the loan. This process can take several weeks to months, depending on the lender's requirements and the borrower's financial situation. The original borrower must qualify for the mortgage on their own to remove the co-signer. It's important to communicate with your lender for specific timelines and requirements.