Credit and bankruptcy?
When I first started to get some credit my uncle cosigned a credit card for me, this was about 4 years ago, I’ve since established some credit, now my uncle needs to file for bankruptcy. Will this hurt me also, what should I do? Should I cancel this credit card? I have now a few credit cards in my name only, and I kept the one he co signed because it has the best interest rate. What should I do? Thanks!
Posted September 8th, 2010 in When To File Bankruptcy. Tagged: bankruptcy, best interest, credit card, credit cards, interest rate.
I would visit http://diylegalinfo.com/bankruptcy_Links.html They have a lot of good information on bankruptcy questions.
September 8th, 2010 at 4:36 pmPay off the co-signed one completely and then close it – just to be safe
September 8th, 2010 at 4:36 pmWhen he co-signed for you, it means that he agreed to pay any debt that you have (or will have) on the card for as long as it’s active. It does not mean that you are on the hook for any debt he has (unless you co-signed a loan for him.)
However, if you want to help your uncle in the long-term, you should call and ask if his name can be removed from your card. It’s possible that they may need his written consent, and your own, to do so. But it will help your uncle – because co-signed debt is factored into calculations that determine whether he’ll get approved any kind of borrowing in the future, including a mortgage.
Without having his name attached your (potential) debt, he’ll be able to borrow more money for himself. (Example: if the credit limit on the card is $5,000, that’s $5,000 less he can borrow for his own purposes – once he’s able to get credit again, of course.)
For now, if you need to pay off the card and close it because you can’t remove his name, do so. The company you’re dealing with may be able to give you another card (based on your own credit history) with a good rate. And the best part is, you’ll finally be standing on your own two feet financially – a factor that lenders will look at if you ever need to get a loan.
September 8th, 2010 at 4:36 pm