I cosigned for a loan for my nephew and im planning on filing bankruptcy. I heard about this co debtor stay that applies to spouses and just wondered if it could apply to me as an Aunt.
Im sorry correction My nephew is the one who is filing a Ch.13
If your nephew files a Chapter 13, provides to pay the claim in full, and he was the beneficiary of the loan, then the codebtor stay applies and protects you from collection.
Family Law Attorney
No. First, the only way such a stay would apply would be if your nephew filed for bankruptcy, which you aren't talking about. Second, it doesn't apply to extended relatives like aunts.
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Chapter 13 Bankruptcy Attorney
No. The co-debtor stay that you are referring to exists only in Chapter 13 bankruptcies, Not Chapter 7 cases. Under Section 1301 of the Bankruptcy Code, when a Debtor files Chapter 13, there is a co-debtor stay with respect to co-obligated CONSUMER debts. However, unless the Chapter 13 Plan specially provides for payment in full of that co-obligated debt, the creditor can seek an order from the bankruptcy court terminating the co-debtor stay.
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Insurance Law Lawyer
I agree with my colleagues: the codebtor stay only applies in chapter 13 cases.
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Chapter 7 Bankruptcy Attorney
If you nephew surrenders the vehicle, crams down the value or the interest rate, then you would be responsible for the deficiency. The co debtor stay will only apply if he is paying the car in full.
You clearly state that your nephew is filing a CHAPTER 13. If he schedules this debt to be sub-classed and paid in full to protect you, the co-debtor, you will be protected under Section 1301. If he files under Chapter 7 there is no co-debtor protection. Check his Chapter 13 Plan (of which you should receive a copy from the Court as a co-debtor) to see how he is treating this obligation. By the way, the co-debtor stay applies to aunts, uncles, spouses, and even non-related parties. The co-debtor is protected in a Chapter 13 to the extent the Debtor is paying the debt.