Often times when someone takes out a debt they will have a co-signer for that debt. The co-signer becomes jointly responsible for repaying that debt. This means that if the person who holds the debt does not pay it back, the creditor can then come after the co-signer for that debt.
However, if a debtor files for bankruptcy, can the creditor come after the co-signer (person who does not file for bankruptcy) for the debt? The answer to this question depends on which Chapter of bankruptcy is filed.
If it is a Chapter 7 bankruptcy, the co-signer receives no protection. The creditor can still pursue the co-signer according to the terms of the original contract.
If it is a Chapter 13 bankruptcy, the co-signer is protected as long as the following conditions are met:
- The debt is a consumer debt
- The co-signer does not benefit from the proceeds of the debt
- The Chapter 13 plan will repay the entire amount owed
As long as the Chapter 13 debtor is making their required repayment plan, the creditor cannot come after the co-signer.