What Happens Now?

What do I do if my co-signer goes bankrupt?

Dear Dave,

What happens to a vehicle if the co-signer on the loan files bankruptcy?



Dear Robert,

First, it means that only the co-signer has gone bad. The car is still in your name, and the loan is still in your name. If you were to notify the bank of this, and that you’d be keeping the car and still making the payments on time, then you shouldn’t have a problem. It also wouldn’t affect your credit score. Just because you partnered with someone who failed with money doesn’t mean you’re going to do the same thing.

There is one thing to keep in mind, though. It may show up on your credit bureau report that the loan has gone into bankruptcy. It shouldn’t indicate that you have gone into bankruptcy, just the loan. That much is true, since your co-signer filed bankruptcy. Still, this shouldn’t damage your credit score.

If it does, just stay on top of things, and report what has happened to the credit bureau. Your credit score should not be affected by something you didn’t do, as long as the loan involved is paid on a timely basis.


Dave Ramsey is America’s most trusted voice on money and business. He’s authored four New York Times best-selling books: Financial Peace, More Than Enough, The Total Money Makeover and EntreLeadershipThe Dave Ramsey Show is heard by more than 5 million listeners each week on more than 500 radio stations. Follow Dave on Twitter at @DaveRamsey and on the web at daveramsey.com.

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