What happens to a cosigner when you file bankruptcy? 18 Answers as of June 01, 2011

Is there a type of bankruptcy or a way that I can protect my cosigner if I file? I have heard that you can only do this in a chapter 13. Is this true?

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Dearbonn Law Offices
Dearbonn Law Offices | Ajibola Oluyemisi Oladapo
your co-signer will be responsible for your debts and will be liable to pay in the event of your default. Also, the co-signer's name will be on the loans , he/she will receive the bankruptcy notice, and your bk may affect the co-signers credit.
Answer Applies to: Washington
Replied: 6/1/2011
Burnham & Associates
Burnham & Associates | Stephanie K. Burnham
The only way you can protect your co-signer is for the debt to get paid. A reaffirmation agreement or a chapter 13 will protect the co-signer.
Answer Applies to: New Hampshire
Replied: 5/31/2011
The Law Office of Mark J. Markus
The Law Office of Mark J. Markus | Mark Markus
That is correct. The automatic stay only protects cosigners in a Chapter 13 case. Even that doesn't change the liability of the co-signer. Once the Chapter 13 is completed, the cosigner is still liable for whatever is owed (that wasn't paid in the Chapter 13 plan). And, a creditor can seek permission from the bankruptcy court during the case to pursue the cosigner.
Answer Applies to: California
Replied: 5/31/2011
Carballo Law Offices
Carballo Law Offices | Tony E. Carballo
That is true.... the automatic stay in a Chapter 13 protects the co-signer from collection actions such as calls, lawsuits, garnishment, etc. but not in a Chapter 7 case.
Answer Applies to: California
Replied: 5/31/2011
Law Offices of John J. Ferry, Jr.
Law Offices of John J. Ferry, Jr. | John J. Ferry, Jr.
The co-signer will still be on the hook for the debt. The creditor can go after the co-signer to try to collect the full amount owed. If you file a chapter 13 with a 100% repayment plan, the creditor might be satisfied with that and will leave the co-signer alone. Another option may be to reaffirm the debt (whether in chapter 7 or 13). Basically, reaffirming the debt means that you sign a contract agreeing to repay the loan even though you would otherwise have no legal duty to do so. I usually recommend that debtors not sign such agreements.
Answer Applies to: Pennsylvania
Replied: 5/31/2011
    The Schreiber Law Firm
    The Schreiber Law Firm | Jeffrey D. Schreiber
    Yes, but only to the extent you pay the debt in Chapter 13. If you do not pay it all in the Chapter 13, the creditor can later collect the balance from the co-signer.
    Answer Applies to: California
    Replied: 5/31/2011
    Indianapolis Bankruptcy Law Office of Eric C. Lewis
    Indianapolis Bankruptcy Law Office of Eric C. Lewis | Eric Lewis
    Yes, co-signer protection only happens in Chapter 13 while you are in the process of repayment. Neither Chapter 7 or the Chapter 13 discharge and plan completion will protect a co-signer who him or herself does not file for bankruptcy protection.
    Answer Applies to: Indiana
    Replied: 5/31/2011
    Janet A. Lawson Bankruptcy Attorney
    Janet A. Lawson Bankruptcy Attorney | Janet Lawson
    Your co-signer is liable on the loan if you file chapter 7. The co-signer enjoys the same "automatic stay" you do while in Chapter 13. But, if your Chapter 13 plan does not pay off the debt, the co-signer is liable for the difference.
    Answer Applies to: California
    Replied: 5/31/2011
    Greifendorff Law Offices, PC
    Greifendorff Law Offices, PC | Christine Wilton
    Unless you are married to the co-signer, they are not protected by your bankruptcy whether it's Chapter 13, or 7
    Answer Applies to: California
    Replied: 5/31/2011
    The Northwest Debt Relief Law Firm
    The Northwest Debt Relief Law Firm | Thomas A McAvity
    A Chapter 13 is usually a better vehicle for protecting a co-debtor as long as your chapter 13 plan specifies 100% payout to your mutual creditor at your current interest rate.
    Answer Applies to: Oregon
    Replied: 5/31/2011
    The Law Office of David Sandy
    The Law Office of David Sandy | David Sandy
    Just in a Chapter 13 possibly an 11 under certain circumstances. It's not a permanent protection either it just lasts the length of the bankruptcy in the 13. The creditor either has to be paid off or the cosigner go bankrupt to for permanent protection.
    Answer Applies to: Tennessee
    Replied: 5/31/2011
    Ashman Law Office
    Ashman Law Office | Glen Edward Ashman
    A Chapter 7 bankruptcy filing does not protect a co-debtor. Indeed it may make them a target. A Chapter 13 in some cases may protect a co-debtor depending on the case, but there are exceptions depending on detailed facts.
    Answer Applies to: Georgia
    Replied: 5/31/2011
    Jackson White, PC
    Jackson White, PC | Spencer Hale
    When you file bankruptcy it is a type of default on a debt, so the creditor could pursue collection efforts or sue a co-signer if the co-signer has not filed bankruptcy him/herself. You can potentially protect a co-signer from adverse action by a creditor by filing a chapter 13, but you need to make sure you treat the co-signed loan appropriately in the chapter 13 plan so as to maintain the protection afforded to the co-signer under the chapter 13.
    Answer Applies to: Arizona
    Replied: 5/31/2011
    Ursula G. Barrios Law
    Ursula G. Barrios Law | Guillermo Machado
    Creditor collects against them.
    Answer Applies to: California
    Replied: 5/31/2011
    Bankruptcy Law office of Bill Rubendall
    Bankruptcy Law office of Bill Rubendall | William M. Rubendall
    There is a co-debtor stay in chapter 13. There isn't one in chapter 7. What the co-debtor stay means is that collection ceases during the pendency of the bankruptcy which will be between 3 and 5 years. At the end of that time the co-debtor will be pursued for the remaining balance owed to the creditor. Essentially the co-debtor is on the hook until the balance is fully paid.
    Answer Applies to: California
    Replied: 5/31/2011
    Symmes Law Group, PLLC
    Symmes Law Group, PLLC | Richard James Symmes
    When you file Bankruptcy your co-singer will still be liable for the debt, however you will not. Filing a chapter 13 may help the situation, but if the debt is not repaid in full the co-signer will be liable for the balance.
    Answer Applies to: Washington
    Replied: 5/31/2011
    Law Offices of Alexzander C. J. Adams, P.C.
    Law Offices of Alexzander C. J. Adams, P.C. | Alexzander Adams
    This is correct. There is no co-debtor relief in a chapter 7. Depending on the situation, however, there may be ways to protect the co-debtor outside of bankruptcy or post bankruptcy.
    Answer Applies to: Oregon
    Replied: 5/31/2011
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