Your Co-Signer and Your Chapter 13

I co-signed for a loan and now I’m filing Chapter 13.  What happens to my co-signer?

A co-signer (sometimes called a co-maker) on any of your debts is generally protected from contact by the creditor during your Chapter 13 bankruptcy by a “Co-Debtor Stay.”  This automatic stay applies to co-debtors only in Chapter 13 cases.

The co-signer stay will only protect the co-signer for the amount of debt that your Chapter 13 plan proposes to pay.  If your plan does not provide for the debt to be satisfied in full, the creditor may obtain permission to collect from your co-signer on the other portion of the debt that is not being paid through the Chapter 13 plan.  The creditor would have to request this permission from the court.  Otherwise, the creditor must wait until your Chapter 13 bankruptcy is over to collect from the co-signer.  If you discharged a co-signed debt in your Chapter 13 but did not pay it in full, the creditor may collect the balance from your co-signer after your bankruptcy is discharged.

 

Questions about a co-signed loan before you file Chapter 13 bankruptcy?

Call 615-255-2893 to schedule a free consultation with a bankruptcy attorney to understand your options.