Ask Bankruptcy Attorney in Sacramento, Stockton, Fairfield, CA – I filed a Chapter 13 Bankruptcy, will my co-signer be protected under the Automatic Stay?

Upon filing of Bankruptcy, Automatic Stay takes into effect to prevent most creditors from collection attempts.  However, there are some exceptions or limitations to automatic stay such as multiple bankruptcy filings and dismissal(s) within 365 days, etc., which will be discussed in a different blog.

Automatic Stay in Chapter 13 Bankruptcy offers broader protection than Chapter 7 Bankruptcy because it extends to codebtors on a "consumer debt".  11 U.S.C. § 1301(a).  Codebtors are those who cosigned or guaranteed a debt with the debtor.  Consumer Debt is debt incurred by an individual primarily for a personal, family, or household purpose.

However, creditors may ask the bankruptcy court for permission to collect from codebtor by filing a Motion for Relief from Codebtor Stay if one of the following is true:

  • Codebtor received the consideration of the creditor's claim;
  • Debtor's plan does not pay for the claim; or
  • Creditor's interest would be irreparably harmed by the codebtor stay.  11 U.S.C. § 1301(c)

For for information about codebtor stay in Chapter 13 Bankruptcy, call Muoi Chea experienced Sacramento Bankruptcy Attorney also serving Fairfield and Stockton, California area like Vacaville, Vallejo, Tracy, Modesto, Citrus Heights, Elk Grove, Roseville, Rocklin, Fair Oaks, Orangevale, Lodi, Galt, CA.