How Does Filing for chapter 13 Bankruptcy Affect Co-Signers?
When a person decides to file for bankruptcy, it is very important to decide, which type of bankruptcy filing is suitable for the person. In some cases the co-signer is asked to pay the person’s debt, it depends on the type of bankruptcy a person files. If the person filing for Chapter 13 Bankruptcy, then the co-signer is protected. While if the person files Chapter 7 then only the debtor secluded and the co-signer is still liable to pay off the debts. Hence, when a person goes for Chapter 7, then the creditors can still demand the person’s co-signer to pay off the debts.
The co-signer is saved under Chapter 13. Under Chapter 13 the co-signer is not free, till the time bankruptcy plans remains active, the co-signer can receive a stay. Besides this, even when the plan is closed, the co-signer has to pay off the outstanding payment. The document contains certain factors that should be satisfied while filing bankruptcy. If not done so then the co-signer has to pay the debtor’s debt. The factors are as following:
- Chapter 13 does not protect the co-signer. However, the co-signer can protect the borrower’s cosigner.
- Under Chapter 13 the co-signer will have to pay the person’s debt.
- The co-signer does not get any benefits out of the debt process.
- The bankruptcy plans should be made according to the requirements.
While filing for bankruptcy, it is important to consider the factors mentioned above and since they are legal matters, so one should deal with them in a suitable manner. In order to protect your co-signer, it is advisable to contact some bankruptcy attorney.
