What is a co-debtor stay in bankruptcy under Chapter 13?

A co-debtor stay means that a creditor cannot proceed against a person or business entity (the co-debtor) that is jointly liable for the debt of a Debtor. The co-debtor is protected under the automatic stay along with the Debtor. 11 U.S.C. § 1301 creates a co-debtor stay in Chapter 13 cases.   A creditor, however, may seek relief from the automatic stay by filing a motion for relief from co-debtor stay if the Debtor does not propose to pay 100% of the liability under the joint debt or if the Debtor’s plan is not confirmable. For further clarification about filing for bankruptcy, please feel free to contact us  and one of our bankruptcy attorneys in Miami will be happy to help you.

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