Can Co-Signers Be Protected In Bankruptcy?
Co-signers can be protected in certain bankruptcies. If you are concerned about protecting your co-signers, a bankruptcy lawyer may be able to help you determine which bankruptcy filing is best for you. In general, if you decide to file Chapter 7 bankruptcy, creditors are still able to proceed with collection efforts against your co-signers-even if you were let off the hook for the debt. However, if you file Chapter 13 bankruptcy, a co-signer is protected if the following provisions are met: • the debt must be a consumer debt; • the debt can’t be incurred in the ordinary course of business; • the co-signer can’t benefit from the proceeds of the debt; and • the debtor sticks to the Chapter 13 bankruptcy payment agreement. You should note that if you fail to complete the requirements of your Chapter 13 repayment plan, the creditors have the legal right to pursue your co-signers. It’s important that you choose a qualified bankruptcy lawyer to handle your case-especially when third parties
