Husband and Wife were joint-debtors of a vehicle loan. The vehicle was repossessed, and there remains a deficiency balance on their loan. The husband subsequently filed Chapter 7 bankruptcy, by himself. I presume that the vehicle loan/debt is discharged as to the husband. Can I pursue a lawsuit in state court against wife for the deficiency balance? If so, does the automatic stay have to be lifted in this case before suit can be filed against wife?
Upon researching the issue, I've discovered that the co-debtor stay applies only to a Chapter 13. It does not exist in a Chapter7.
Chapter 7 Bankruptcy Attorney
The automatic stay applies to both husband and wife while the bankruptcy case remains open, even if the wife did not file. It's better to be safe than sorry!
Chapter 13 Bankruptcy Attorney
I have to respectfully disagree. The Chapter 7 filing only protects the husband and not the wife. Since the car is already repossessed then you will not have to lift the automatic stay. If the husband filed a Chapter 13 then you would have to wait until he defaults on the 13 plan and it gets dismissed before pursuing the wife.
Personal Injury Lawyer
Attorney Badwan is correct. If only one spouse filed a chapter 7, then the automatic stay which stops any collection action including a lawsuit applies only to the spouse that filed the chapter 7. In a chapter 13, non filing co debtors are covered by the stay as long as the chapter 13 case remains open.
This answer is provided for informational purposes only. Actual legal advice can only be provided in an office consultation by an attorney licensed in your jurisdiction, with experience in the area of law in which your concern lies.
Debt Collection Attorney
As you have indicated after having done your research, the co-debtor stay does not apply to a Chapter 7 filing. Thus, you may proceed with suit against the wife.