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Glossary

Codebtor Stay: What It Is and Who It Protects

A codebtor stay is a protection in Chapter 13 and Chapter 12 cases that bars a creditor from collecting a consumer debt of the debtor from another individual who is liable on that debt or who secured it (11 U.S.C. §§ 1301(a), 1201(a)). It arises after the order for relief. It has exceptions, and a creditor can ask the court to lift it.

Key points

  • The codebtor stay protects a co-signer or guarantor, not the person who filed — the filer is protected by the separate automatic stay under 11 U.S.C. § 362.
  • It exists only in Chapter 13 (11 U.S.C. § 1301) and Chapter 12 (11 U.S.C. § 1201); there is no equivalent codebtor stay provision in Chapter 7.
  • It reaches consumer debts only, and does not apply when the codebtor became liable in the ordinary course of that individual's business (11 U.S.C. § 1301(a)(1)).
  • It ends automatically if the case is closed, dismissed, or converted to Chapter 7 (11 U.S.C. § 1301(a)(2)).
  • A creditor can obtain relief from it, and on one ground the stay terminates 20 days after the request unless someone objects (11 U.S.C. § 1301(c)–(d)).

If someone co-signed a loan with you, or you co-signed for someone who has now filed a Chapter 13 case, the codebtor stay is the provision that decides whether the lender can keep calling. It is a narrow protection with real limits. Here is what it does and where it stops.

What does "codebtor stay" mean?

A codebtor stay is the statutory bar in 11 U.S.C. § 1301(a) (and its Chapter 12 counterpart, 11 U.S.C. § 1201(a)) that stops a creditor from acting, or commencing or continuing any civil action, to collect all or any part of a consumer debt of the debtor from any individual who is liable on that debt with the debtor or who secured it.

That individual is the codebtor: a co-signer, a co-borrower, a guarantor, or someone who pledged collateral for the debt. The codebtor has not filed anything. The protection reaches them because the debtor filed.

Two limits are written into the same sentence. It applies to a consumer debt, and it does not apply where the individual became liable on or secured the debt in the ordinary course of that individual's business (11 U.S.C. § 1301(a)(1)). A business guaranty is generally outside it.

Why does it matter in a bankruptcy case?

The automatic stay under 11 U.S.C. § 362(a) protects the person who filed and property of the estate. It does not, by its terms, protect a separate individual who happens to owe the same debt. Without § 1301, a lender could leave the filer alone and pursue the co-signer for the entire balance instead — collecting the same money from the family member who signed as a favor.

Congress addressed that directly. The legislative statements accompanying § 1301 explain that a basis for lifting the stay is that the debtor did not receive consideration for the claim, "or in other words, the debtor is really the 'codebtor.'" The protection is aimed at the person who does not ultimately bear the liability.

Practically, this is one of the concrete differences between the chapters. A repayment plan can propose to pay a co-signed debt; Chapter 7 has no codebtor stay provision at all.

How does the codebtor stay work in practice?

It takes effect after the order for relief, without anyone applying for it. A creditor who wants around it files a motion for relief from the codebtor stay. Under 11 U.S.C. § 1301(c) the court, after notice and a hearing, grants relief to the extent that the codebtor received the consideration for the claim, the debtor's plan proposes not to pay the claim, or the creditor's interest would be irreparably harmed by continuing the stay.

The second ground moves fast. Under § 1301(d), 20 days after a request based on § 1301(c)(2), the stay terminates as to that creditor unless the debtor or a codebtor files and serves a written objection.

Local practice varies. Some districts require a separate motion (M.D. Tenn. LBR 4001-1), some allow it combined with a § 362 motion (Bankr. D. Haw. LBR 4001-1), and some require each codebtor to be named (Bankr. D.S.D. R. 4001-4). Check your court's local rules.

What do people get wrong about it?

The most common error is reading it as debt forgiveness for the co-signer. It is not. The codebtor stay pauses collection activity; it does not eliminate the codebtor's liability, and a discharge granted to the debtor does not discharge the codebtor.

The second error is assuming it lasts. It stops when the case is closed, dismissed, or converted to Chapter 7 (11 U.S.C. § 1301(a)(2)), and a creditor may end it earlier through § 1301(c) or the 20-day mechanism in § 1301(d). In a Chapter 13 case the plan itself may also address termination in some districts (N.D. Okla. LBR 4001-1).

Third, § 1301(b) expressly permits a creditor to present a negotiable instrument and to give notice of dishonor. And filing does not stop a creditor from reporting or pursuing a co-signer on a debt that is not a consumer debt of the debtor.

Frequently asked questions

Does the codebtor stay exist in a Chapter 7 case?
No. The codebtor stay provisions are 11 U.S.C. § 1301 (Chapter 13) and 11 U.S.C. § 1201 (Chapter 12). Both say the protection ends if the case is converted to Chapter 7 — § 1301(a)(2) also names conversion to Chapter 11. A co-signer generally gets no comparable stay in a Chapter 7 case, though the filer still has the § 362(a) automatic stay.
Does the codebtor stay wipe out my co-signer's obligation?
No. It bars collection activity against the codebtor while it lasts; it does not cancel the debt or the codebtor's liability on it. When the stay ends — because the case closed, was dismissed, was converted, or the court granted relief under 11 U.S.C. § 1301(c) — the creditor's rights against the codebtor generally remain.
What can a creditor do to get around it?
File a motion for relief from the codebtor stay. Under 11 U.S.C. § 1301(c), the court grants relief after notice and a hearing to the extent the codebtor received the consideration, the plan proposes not to pay the claim, or the creditor would be irreparably harmed. On the plan-does-not-pay ground, § 1301(d) terminates the stay 20 days after the request unless the debtor or codebtor objects in writing.
Do the filing fees differ because a co-signed debt is involved?
No. The fees turn on the chapter, not on who else signed. The Chapter 13 filing fee is $235 (28 U.S.C. § 1930(a)(1)(B)) plus a $78 administrative fee (Bankruptcy Court Miscellaneous Fee Schedule, Item 8). Some districts charge nothing to file a motion for relief from the codebtor stay; others do. Check your court.

Sources

By Antonio G. Jimenez, Esq. · Florida Bar No. 21022

Sources verified July 28, 2026 · How we verify

Every figure on this page is drawn from a primary legal source and checked against our canonical legal database before publication. Bankruptcy.law is not a law firm and does not provide legal advice.

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