Expert: Terry Leeders - 5/5/2009

Question
We have filed bankruptcy.  We were going to reaffirm a car with our lender, only the lender is attempting to tie an unsecured personal loan to this car loan.  Of course the court will not approve this action.  First can they really add this loan to the car loan they are two separate loans just with the same lender.  The car loan has a cosigner.  We assumed if we could not reaffirm that the lender would hold the cosigner responsible for the vehicle.  However, we have been told they will repo the car auction it and then hold the cosigner liable for the balance.  The cosigner is willing to take over the loan and pay it in full.  Don't they have to give them that option.

Answer
Cosigners are equally responsible for the debts, so if you reaffirm and the note is current, then all should be fine.  If there is any default, the creditor can repossess and hold the cosigner liable (and you if you do reaffirm) As for tying in the unsecured debt, it sounds like they are arguing cross collateralization - many credit unions do this. So, have your attorney read the loan documents to clarify the position for you.