Written by attorney Casey Kevin Yontz

How Do I Protect a Co-Signer? Will Chapter 13 Bankruptcy Protect My Co-Signer?

How Do I Protect a Co-Signer? Will Chapter 13 Bankruptcy Protect My Co-Signer? Of course, many people have co-signers on a car, truck, ATV, etc. When faced with a period of economic hardship, many will not even consider bankruptcy when they have a co-signer on a debt. This is because, it is the common perception that bankruptcy will not protect a co-signer, and said co-signer will be left "holding the bag." This is NOT TRUE. Bankruptcy can indeed protect a co-signer. NOT CHAPTER 7 BANKRUPTCY - If you file Chapter 7 bankruptcy, the creditor can proceed against your co-signer, according to the terms of the original contract that you and the co-signer entered into, once the bankruptcy is over. If one of your major concerns is to protect a co-signer, then you should consider Chapter 13 bankruptcy. CHAPTER 13 BANKRUPTCY CAN PROTECT A CO-SIGNER. You can protect your co-signer to the extent that the Chapter 13 payment plan proposes to repay the debt, and if certain conditions are met. The debt must be a consumer debt, that wasn't incurred pursuant to a business transaction, and the co-signer cannot have been the sole benefactor of the debt. If you file Chapter 13 bankruptcy, as long as you are making the required Chapter 13 planned payments, creditors cannot collect, or even attempt to collect from the co-signer. The purpose of this provision of Chapter 13 is to allow you to repay the debt without creditor pressure.

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