Expert: Terry Leeders - 1/12/2012

Question
Hi,
My wife filed ch7 and she was discharged, we had 2 cars (me & her on the contract)  from a lender that was paid off after we filed a motion, now the remaining balance on what we owed on the cars is showing up on my credit report, how can i clear it since it was paid off?
Thank you.

Answer
Unfortunately, you will owe this.

Redemptions (buying out the balance of the note for fair market value) are good, if the case is a joint filing, or if the car was only owned by the debtor and not cosigned.

Since you jointly owed the debt, the bankruptcy redemption only clears her portion of the debt.  You remain liable for the full balance owed, minus any of the redemption amount since you didn't file a joint bankruptcy.  Cosigners remain liable for any unpaid balances.  

Best to work out a payment plan with the creditor, otherwise they can collect on the debt, sue, garnish etc.

Thanks for your question, good luck.  Wish I had better news for you.