Effect of Bankruptcy on Cosigner's Credit Report

The question here is whether the credit report of a person get affected who signs for a joint mortgage loan with a person who has filed for a bankruptcy.

Many you undertake a joint Mortgage with a person, the Mortgage account appears on the credit report of both people. However, the bankruptcy record in the credit report of the cosigner does not have to appear on your credit report.

Since a bankruptcy filing appears on the credit report for a period of seven years for a chapter 13 bankruptcy and for a period of 10 years for a chapter 10 bankruptcy filing, the records will continue to show on the credit report of the cosigner till this duration is over. All the accounts that are included in the bankruptcy will show the status as being included there in. Every account in a credit report has a particular status attached to it. For example if the account is current and active it shows the status as thus. If the account is delinquent the status of the count in the credit report will reflect the same. If the account has been laid in the past by over 30 days but is current now, then the status of the count in the credit report will say exactly this.

While the bankruptcy filing of your cosigner will not have any direct effect on your credit report the problem will perhaps arise when the creditor evaluates the creditworthiness of your cosigner. The idea behind signing a Mortgage loan jointly is to share the burden of credit. Creditors appreciate to people taking a loan jointly because it distributes the liability and makes the risk of the loan lesser. However, in case of your cosigner having filed bankruptcy in the past, the creditor might find this to be unfavorable information that may affect the prospects of procuring the line of credit.

If you do manage to get the Mortgage along with your cosigner then there should be no adverse effect on your credit report as long as you keep the payment on your Mortgage regular and current.

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