If a co-signer of a loan files Bankruptcy, does it affect the others credit rating?
When your Mother-In-Law co-signed for the loan she made a legal agreement that said she would make the payments on the loan if the person she co-signed for does/can not make them. So it will show on your Mother-In-Laws credit report that it was included in Bankruptcy of the other party. This alone won’t really effect her credit, especially if the other person re-affirms the debt. However, if the other party declares BK and does not re-affirm the debt your MIL now becomes totally liable for the loan. If she does not pay on the loan it could have a very negative effect. That is it will be a negative on her credit report and they could eventually come after her by filing a suit for the balance.
