Co-signers are people who have lent their good name and credit to someone else so that they may get credit. This is a risk.

For the small business owner who owns majority stock in a small company, the bank may ask that the owner to cosign any loans made for the benefit of the corporation. There are two kinds of cosigning. Cosigning as a surety and cosigning as a guarantor. The surety is a promise directly to the creditor that they will pay if the primary debtor fails to pay. A guarantor, on the other hand, agrees to pay only after all avenues to get money from the principal debtor have failed.

The cosigner of a note has no protection if the debtor files Chapter 7 bankruptcy. If the debtor files a Chapter 13, the cosigner may have a legal defense to a lawsuit.

If you are unsure as to your liability as a cosigner before or after the fact, get legal advice. Contact our office to speak with an experienced Arizona bankruptcy lawyer at Platt & Westby.