I am legally seperated and as part of the property settlements entered, my "spouse' has accepted full responsibility for payments on a boat that was purchased where I co-signed for him. He has since declared bankruptcy, but arranged to contunie to pay for the boat. The issue is that this is appearing on my credit report now as in collections, as there was a lag in payments while the bankruptcy was processing. My question would be is this seperation agreement legally binding to the Lender once they are made aware of this? The agreement was filed in New York and the boat was purchased in NY as well.
1 Answer from Attorneys
I cannot advise you as to New York law. But, in Missouri, the lender is not bound by the restrictions of your divorce decree property division, until they accept it. Just knowing about it does not limit their ability to go after the cosignor. If they do, then the one spouse can sue the other (that is obligated to pay by the divorce decree) for compensation for what they have to pay the creditor. However, , the bankruptcy file may prevent the creditor from suing either of you, until it is resolved.