When in a bankruptcy chp 13 & co-signer on a family members loan can the debtor still come after me if the loan is not paid.
Sheboygan, WI
Viewed 26 times.
Posted 24 days ago in Bankruptcy / Chapter 13
Flag as objectionable
In a chapter 13 now. I am still a co-signer on a family members loan. If that family member files bankruptcy can the debtor still come after me. It is not a federal loan.
- Is this your question? Add additional information
Answers (1)Benjamin Patrick Payne
This attorney is licensed in Wisconsin.
Posted 20 days ago.
Flag as objectionable
If you listed the creditor (lender) as a creditor in your bankruptcy case, then regardless of whether your family member who is also obligated on the note files a bankruptcy, you are protected from that creditor by the automatic stay in your Chapter 13 bankruptcy case. That means that even if your co-signing family member does not file bankruptcy, if that co-signer defaults on the obligation, that creditor cannot sue you or attempt in any way to collect from you without first filing a motion to get that permission from the judge in your bankruptcy case. Unless the loan was taken to purchase property on which the creditor holds a lien (ex. a car) and unless you have possession of that property, it is unlikely that the creditor would file any papers in your bankruptcy case to try to collect from you.
A little background might be helpful to your understanding what I wrote above. I am assuming that the loan was not to purchase specific property and that if it was to purchase specific property, you do not have possession of it - the other co-signer does. If that is the case, then when you co-signed the loan, you became obligated to pay the note in the event the other co-signer does not. That type of claim is no different than any other type of unsecured debt you listed in your bankruptcy case, like a credit card, medical bill, or utility bill. As a general unsecured claim (assuming you listed that creditor as a creditor in your case on Schedule F), that creditor would only be entitled to the same percentage your Chapter 13 plan proposes to pay to all general unsecured creditors, regardless of whether the other co-signer files a bankruptcy case. If the other co-signer files a bankruptcy case, the creditor would probably file a claim in your bankruptcy case (if they haven't already) for the balance due on the obligation and as long as they filed their claim in your case on time, they would be entitled to be paid the same percentage as all of the other general unsecured creditors in your case, with the unpaid balance discharged upon the successful completion of your Chapter 13 plan. In short, you probably have little to be concerned about, but this is absolutely an issue you should discuss with your Chapter 13 attorney because if any of my assumptions were incorrect, the answer to your question could be very different. |