What is the definition of a “co-signer” of a debt? This is a situation created when there is more than one person (or entity) who has signed for the debt or is otherwise liable on it. It comes up in many situations. For example, I had a gentleman call me the other day to discuss a situation he had in co-signing for a family member’s student loans and credit card debts. This situation can also arise in owners of businesses, when both the business (the “entity”) and the individual owner signs for the debt. In the metro Kansas City area, there are a huge number of different types of businesses, each with its own specific traits.
Of course, it’s in the creditor’s best interest to have as many people or business entities liable for a debt as possible. When one co-signer files a bankruptcy case, and the other co-signer does not, the co-signer who has not filed for the bankruptcy will still be liable for the debt. This is true regardless whether the non-filing co-signer is a business or an individual. So, think very carefully before ever co-signing on a debt. We understand that in many cases it is unavoidable, but you should be aware that agreeing to co-sign for another’s debt means that you are agreeing to be liable for the debt.
This type of situation can get complicated when there are both individuals and business entities (LLCs, S corporations, PAs, etc) who are responsible for a debt. It can be very important to select the proper type of bankruptcy to file, in order to maximize your legal protections and benefits. Please give us a call if you have any questions about this subject. We’re more than happy to share our combined years of experience in representing businesses and individuals in these situations.
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