Will my Bankruptcy Case Help My Co-Debtors in New York City?
Unless you are married a Chapter 7 bankruptcy will not help your co-debtor with their portion of a shared debt in New York City. Once you receive your Chapter 7 discharge the financial obligations of your co-debtor will remain. In a Chapter 13 bankruptcy case on the other hand your co-debtor will find some relief in the form of the “co-debtor stay” but they will still be on the hook for any other debts they have individually signed for.
Any co-debtors listed on a loan with you will be protected in your Chapter 13 bankruptcy on the particular debts you share that are listed in the bankruptcy petition. 11 U.S.C. 1301 – Stay of action against co-debtor states, “ a creditor may not act, or commence or continue any civil action, to collect all or any part of a consumer debt of the debtor from any individual that is liable on such debt with the debtor…”. This is commonly referred to as the “Co-Debtor Stay.” Provided you complete the terms of your 3-5 year Chapter 13 re-payment plan your co-debtor will also be relieved of any obligation to the debt. Many creditors see no repayment whatsoever in a Chapter 13 plan, so it’s very likely that you will be able to completely eliminate your shared debt and protect your co-debtor by filing for Chapter 13 bankruptcy in New York City.
There are some creditors that either do not understand the “co-debtor stay” or just choose to ignore it. If the creditor continues to harass your co-debtor after they have been informed of the Chapter 13 case then they will likely be in violation of the Fair Debt Collections Practices Act and could be sued accordingly. Your attorney will know how to keep the creditors off you and your co-debtor’s back and will ensure they are not stalked for a debt that was legally eliminated in your bankruptcy.
Bankruptcy, and Chapter 13 filings in particular are not for everyone in debt, but if you are overwhelmed by your bills and worried about protecting a co-debtor then you should speak to a qualified bankruptcy attorney about your debt relief options right away. If you have creditors breathing down your neck already then bankruptcy is the quickest and most complete way to both protect your co-signers and get you back on your feet quickly. If you live in New York City and would like to arrange a free consultation with an attorney familiar with protecting co-debtors in bankruptcy cases please contact the Law Offices of William Waldner online or at 212.244.2882 to arrange a free bankruptcy consultation today. We only practice bankruptcy law, and have a 99% Chapter 7 Bankruptcy discharge record in New York City as of 8/31/16.
This article is intended for educational purposes only. By reading no attorney-client privilege has been created.