How are cosigned debts treated in Chapter 13?
If a Chapter 13 plan proposes full payment of a claim where a cosigner is responsible for a consumer debt, the creditor cannot attempt to collect such debt from the cosigner. If the payment to the creditor is reduced, and the creditor is still paid in full, the creditor has to be content with getting payments from the trustee in such circumstances. It is possible, however, that, unless the plan pays the contract rate of interest, the balance of the interest not paid could be sought after the completion of the case from the cosigner. If the Chapter 13 plan does not propose to pay the claim in full, then to the extent that it does not, the affected creditor can petition the bankruptcy court for permission to collect this money from the cosigner.
