Often times people are convinced to sign a promissory note as a co signer and think that they will never have to step up to the plate and make payments.
They simply sign as a co-signer and then forget about the debt. Unfortunately, there is no law that requires the bank or whatever lender to notify you when the ‘girlfriend’ or other person is not making the payments. It is very possible, if not probable, that a bank could allow the primary maker of the note or debt to default on a loan for several months before coming to you to ask for payment. And it is possible under those circumstances that the loan could be in default, with the lender calling the whole balance due and payable.
If you are a co signer on a note and have now been called upon to pay the note because the primary make has defaulted, you need to aggressively work with the lender to try to work out a payment plan with the bank.
Once you work out a payment plan under the terms of the original note, you should take the steps to make sure that you will have the right to go after the ex-girlfriend (or whomever).
This can be accomplished by you executing a separate promissory note to the bank, buying the original promissory note from the bank and then filing suit against the girlfriend or other person who was the primary maker of the note.
If you are unable to work out a payment plan with the lender in this situation and the lender is pushing forward with a lawsuit against you to collect under the note you have options inside and outside of bankruptcy to protect your income and your assets.
Outside of bankruptcy, you can claim exemptions under Tennessee law by virtue of Tennessee Code Annotated §26-2-104 through 111 and §26-2-301 & 305.
These code sections protect a your clothing, your retirement funds and a limited amount of your wages, personal property and home equity among other things.
These exemption statutes can be used as leverage with creditors to work out a payment plan and they give the Courts the authority to protect you with or without the consent of the creditor.
Of course consumers also potentially have the option of seeking protection under the federal bankruptcy code. Most consumers seek protection under either Chapter 7 or Chapter 13 of the bankruptcy code. Both forms of bankruptcy impose an injunction against your creditors from pursuing collection efforts against you while the case is pending and both forms of consumer bankruptcy can wipe out your debts in some fashion, assuming you are qualified to file bankruptcy.
If you have been sued or the bank is calling you about paying a debt owed to them as a result of you co-signing a note CALL MY OFFICE TODAY at (731) 423-1888. We will meet with you (the first meeting is free) there will be no pressure to do anything.
We will explore your options – with over 26 years experience in bankruptcy and debt settlement negotiations I am sure that we can HELP YOU GET YOUR LIFE BACK.
You can also see a video answer to this question here.