Law Offices of Carol D. Ellis, P.A.
Call for a Free Consultation 561.513.5809 En EspaÑol
  • Home
  • About Our Firm
  • Meet Carol D. Ellis
  • Bankruptcy
  • Family Law
  • Estate Planning
  • FAQ
  • Contact Us
  • Call Today
  • Email Us
  • Our Map
  • Menu
Blog 2011 July Chapter 13 Co-Debtor Stay
Previous Post  |  Next Post

Chapter 13 Co-Debtor Stay

Posted By Palm Beach Bankruptcy Lawyer || 1-Jul-2011

The "Co-Debtor Stay," also known as the "Co-Debtor Automatic Stay," is a feature of a Chapter 13 Bankruptcy designed to protect a debtor by insulating him from indirect pressures from his creditors exerted through friends or relatives. The Co-Debtor Stay stops all collection actions against any individual who is obligated on a consumer debt owed by the debtor. The Co-Debtor Stay continues until the Chapter 13 case has concluded.

The Co-Debtor Stay is not a direct protection intended for the co-debtor. The debtor's Chapter 13 Bankruptcy will not discharge the co-debtor's responsibilities to the creditor. It will, however, prevent collection action by the creditor against the co-debtor (e.g. lien perfection or even adverse notation on the co-debtor's credit report) during the pendency of the Chapter 13 case.

The Co-Debtor Stay does not prohibit collection on a debt incurred in the ordinary course of business by the debtor. Additionally, tax debt is generally not considered a consumer debt. It is important to note that the Co-Debtor Stay does not apply at all to Chapter 7 Bankruptcy cases.

The Co-Debtor Stay is effective immediately upon the filing of the debtor's Chapter 13 petition and continues until the case is closed, dismissed, or converted to Chapter 7 or 11. The Bankruptcy Court can also modify or terminate the Co-Debtor Stay upon the motion of a creditor. The creditor may be successful in this type of motion if the codebtor received "consideration" for the debt (e.g. you cosigned a car loan for your brother, who actually owns the car), if the debtor's Chapter 13 plan proposes to not pay the debt, or if the creditor's interests would be irreparably harmed by continuation of the Co-Debtor Stay.

A knowing violation of the Co-Debtor Stay is contempt of court and punishable by damages, including attorney's fees. Any collection action taken by a creditor in violation of the co-debtor stay is void.

The Co-Debtor Stay is a powerful tool to prevent collection action in Chapter 13 Bankruptcy. If you are contemplating a bankruptcy filing and have co-debtors, consult with an experienced Palm Beach bankruptcy attorney.

Categories: Bankruptcy, Chapter 13, Co-Debtor Automatic Stay, Co-Debtor Stay

Share Post

Bankruptcy

How Can We Help You?

  • Chapter 7
  • Chapter 13
  • Bankruptcy Process
  • Alternatives to Bankruptcy
  • Bankruptcy Myths
  • Creditor Harassment
  • Foreclosure
  • Mortgage Modification Mediation Program
  • Repossession
  • Wage Garnishment
  • Will I Lose My Car & Home?
  • Working With the Hispanic Community
  • Bancarrota
  • Capítulo 7
  • Capítulo 13
  • Ejecucion Hipotecaria

Contact Our Law Offices Today

Send My Information
  • Home
  • Site Map
  • Privacy Policy
  • Contact Us
Law Offices of Carol D. Ellis, P.A.
Law Offices of Carol D. Ellis, P.A. - Palm Beach Lawyer
500 Australian Ave. South, Suite 600, West Palm Beach, FL 33401 View Map
Call Today (561) 513-5809
Website: http://www.carolellislaw.com/
© 2023 All Rights Reserved.
Internet Marketing Experts The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship.