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Will an automatic stay stop garnishment of a cosigners wages after a Chapter 7 bankruptcy? If not, what can?

Atlanta, GA |

I bought a car for my daughter and she cosigned. I filed chapter 7 bankruptcy protection. Now they are coming after her. They've since repossessed the car and are now threatening to garnish her wages. She works part time and is a full time student. What can she do to prevent this garnishment. An automatic stay or file bankruptcy her self?

Attorney Answers 4


Once you filed the chapter 7 case the automatic stay protected you and the co-debtor stay protected your daughter. However, the creditor may have moved the court to terminate the automatic stay and co-debtor stay. If not, the co-debtor stay no longer operates after discharge. So if you've received your discharge your daughter is no longer protected. You are no longer liable to the creditor but your daughter is. The creditor probably hasn't done anything wrong unless they took the vehicle while the stay was in effect. If that's the case see a bankruptcy attorney because it may be possible to sue the creditor for damages. In any case, once the stay terminates, the creditor is free to pursue your daughter. I'd recommend that your daughter see a bankruptcy attorney to discuss this situation. It may or may not make sense for her to file depending on her particular circumstances. Good luck.

Alon Nager
Disclaimer: Please note that this answer does not constitute legal advice, and should not be relied on, since each state has different laws, each situation is fact specific, and it is impossible to evaluate a legal problem without a comprehensive consultation and review of all the facts and documents at issue. This answer does not create an attorney-client relationship.

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There is usually no codebtor stay in Chapter 7 (there is in a 13). Your attorney (and I hope you have one as bankruptcy is not a do it yourself project) should have advised you on what would happen to your daughter.

She may also need to file and we'd be glad to talk to her if she's in this area. Have her call us.

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If you were to file a Chapter 13, you could use the codebtor stay to protect your daughter. However, in order to protect her, you would have to pay back the entire balance owed to the creditor along with contract interest.

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The co-debtor is not protected in chapter 7, only in chapter 13. Your bankruptcy attorney should have advised you of this. I would recommend you daughter file her own bankruptcy to prevent creditor harrassment and garnishment.

Danielle Eliot

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