What is a Co-Debtor Stay in Chapter 13 Hawaii Bankruptcy?

The Co-Debtor Stay applies in Chapter 13 bankruptcy toconsumer debts. It does not apply in a Chapter 7 bankruptcy.

The co-debtor stay stops collection against people who are not in bankruptcy.  When a person files chapter 13 that filing also protects any one else who owes onthe debt as well.  It protets them even though they did not file bankruptcy. A co-debtor is someone who agrees to be liable on the debt with the debtor, the person filing bankruptcy. It does not matter if they sign as “secondary” or “primary” or as “guarnator” or as a “surety.” All of those persons are co-debtors and protected by th stay.

If the creditor tries to collet from the do-debtor they are liable to the co-debtor for violatig the stay.  They are in contempt of court order.

The purpose of Co-Debtor Stay is to delay collection actions against a co-debtor for consumer debts during the Chapter 13 bankruptcy case and remains in place until the bankruptcy case has been closed, dismissed, or converted to Chapter 7 or the stay is lifted.

Further protection for co-debtors

In a chapter 13 the filing debtor ays the trustee for the 3 to 5 years.  That money can be applie to a cosigned debt to put it infront of toher creditors so that the cosigned debt is paid off in full.  Meaning at the end of the case the person filing is free of the debt and co-debtor who did not file is also free of the debt.

It is a complex caluclation and each case is different.

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