Protecting Cosigners under Chapter 13

[GG1981]

Hi,

My attorney will be filing my chapter 13 papers in the next coming days if not already done so. I'm hoping some of you will chime in on what happens to co signers when the other cosigner files for Chapter 13. I had to include a cosigner in two different loans. Those loans were current before the filing of the Chapter 13. When filing for 13, there is no picking what loans go into the bankruptcy. I had to include all the loans that I had open.

Anyways, my concern is my cosigner. Even though the loans were current up until the filing of the 13, will her credit still get screwed up? Is there anything I or she could do to protect her self? She is my sister; one loan is secured(car) the other is unsecured(credit card).

Thanks

[MSbklawyer]

How are you treating the debt she cosigned with you in the Chapter 13? Are you paying it 100 percent or are you discharging some of it?

[GG1981]

How are you treating the debt she cosigned with you in the Chapter 13? Are you paying it 100 percent or are you discharging some of it?

The secure loan will be paid in full. Although, I think the way the payment plan is set up, the secure loan will not start to get paid until the fourth month. The first four months will go to other fees.

The Credit Card loan will paid not be paid in full. The amount they get could be less or more than plan, but not in full.

[MSbklawyer]

The secure loan will be paid in full. Although, I think the way the payment plan is set up, the secure loan will not start to get paid until the fourth month. The first four months will go to other fees.

The Credit Card loan will paid not be paid in full. The amount they get could be less or more than plan, but not in full.

If you are paying it in full through the plan, she is protected by the co-debtor stay. If you are not paying it in full, they can go after her.

[GG1981]

If you are paying it in full through the plan, she is protected by the co-debtor stay. If you are not paying it in full, they can go after her.

I understand during her time in the plan, she is protected, legally. What about credit wise? They report any negatives on her credit?

[ccfriend]

My husband did not file with me. We had a few loans that are in both names. On my credit report they say included in Bk but on his credit report they show that they are current and in good standing.

[justbroke]

I understand during her time in the plan, she is protected, legally. What about credit wise? They report any negatives on her credit?

First, the co-debtor stay applies so long as your case is active. In order to proceed against your co-debtor, they would need to motion for and be granted relief from the automatic stay. In my experience, this doesn't happen too often where the creditor is getting paid, but the auto lenders seem to be the greediest and proceed against co-debtors (are granting of the motion).

Did the creditor (credit card one) even file a claim? (Oh, you haven't filed yet.) I've seen cases where credit card companies don't even file claims. I have about $36K or more in credit cards that never filed a claim!

[GG1981]

My husband did not file with me. We had a few loans that are in both names. On my credit report they say included in Bk but on his credit report they show that they are current and in good standing.

I'm glad to hear that, hopefully this is the standard and my cosigner's credit stays good.

First, the co-debtor stay applies so long as your case is active. In order to proceed against your co-debtor, they would need to motion for and be granted relief from the automatic stay. In my experience, this doesn't happen too often where the creditor is getting paid, but the auto lenders seem to be the greediest and proceed against co-debtors (are granting of the motion).

Did the creditor (credit card one) even file a claim? (Oh, you haven't filed yet.) I've seen cases where credit card companies don't even file claims. I have about $36K or more in credit cards that never filed a claim!

My meeting with the creditors will be some time in the next month or so. It's a matter of my attorney to file the papers. He should do it some time this week, that's if he didn't already do it. As to creditors filing a claim, when do they file this? Is this like an objection to the motion at the creditors meeting?

I think the auto creditor will be fine, since they are going to get paid in full. The only thing is that they wont start to get paid until the fourth month. That's how the payment plan is setup.

[MSbklawyer]

What about credit wise? They report any negatives on her credit?

Not if they are paid 100% through your plan, no. But if they are not paid 100% through your plan and then she does not voluntarily step in and pay the debt, then yes, that will show up negatively on her credit report.

[sunshineMN]

I too was wondering about co-signers and how their credit is effected.

We have a student loan that my father co-signed on. We have been current on it and never late once. As far as I know right now, when we file, we will continue to pay on this student loan (outside of the plan per lawyer). So, Sallie Mae shouldn't have any issues since they will get their money - and on time.

But, what I'm confused on is that our lawyer said that it can all depend on how Sallie Mae reports to the CB. Even though we are still paying, my father's credit could get dinged with a default.

Does this sound right??? Anyone have experience with this??

[brokenymom]

i filed 13 in november i had 3 loans with my husband who did not file. we only had to put 1 auto in left the second out as well as the home equity line. his credit is fine score has not dropped and capital 1 is being paid thru trustee

[ajaperk]

I am in the beginning stages of a chapter 13. My house is current, never been late. It will be paid outside of the plan. My dad co-signed for my house, I'm the primary on it. Will he be notified of the Chapter 13 even though the house payment is not in the plan?

[justbroke]

Will he be notified of the Chapter 13 even though the house payment is not in the plan?

No. Unless you list him as a creditor in your petition and place him on the Mailing Matrix, he won't be notified by the Bankruptcy Court. Is he a creditor?

[ajaperk]

No, he is not a creditor. The loan is through my bank for a mobile home. I had bad credit after my divorce so they wanted hiim to co-sign for it. I have made all payments, he has nothing to do with the loan except his name is on it incase I default. I have always made the payments on time and will continue to do so. His name actually isn't even on the title to the house, they only put my name on it. So he is only on the loan.

[jennilynn]

No. Unless you list him as a creditor in your petition and place him on the Mailing Matrix, he won't be notified by the Bankruptcy Court. Is he a creditor?

BUT - Codebtors are to be listed and yes, they are supposed to get a notification that you have filed bankruptcy. Schedule H lists codebtors.