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Don't forget co-signers in the event of bankruptcy

Financial issues can leave you feeling as if you are all alone in the world. That isn't the case most of the time. There may be times when issues crop up suddenly and leave you reeling. Unexpected medical bills might be an example.

Often, though, debt problems develop gradually. And in the course of time, it may be that others have attempted to help you out. Maybe a parent or a sibling co-signed so you could get a much needed loan.

The good news, of course, is that finding debt relief isn't something you have to do alone. Working with an attorney with experience in bankruptcy law is one way to make sure you know all of your options. And if bankruptcy winds up being the route you take to get back to solid financial ground, don't forget that those who may have supported you need to be kept in the loop. 

Here's why. While bankruptcy will serve to relieve you of your burdens once the process is complete, it could wind up harming those who have helped you if you haven't filled them in on what's happening. A loan you once had may be forgiven, but if you forget your co-signer, the lender could wind up going after them for the balance due. At the very least, it could result on your helper's credit score taking a horrible hit.

It may be that the wisest advice to follow is to never put a loved one in the position of co-signing for you. But that only works going forward. If the deed has been done, the proper thing to do is to make sure that your plans for financial recovery also take any co-signers into account.

Source: The Star-Ledger, "Your Money: The perils of co-signing a loan," Karin Price, April 8, 2014

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