Co-signed and joint debts in bankruptcy

How does a discharge affect someone who co-signed my loan?

A discharge operates on you. Under 11 U.S.C. § 524, a discharge voids judgments determining your personal liability on discharged debts and acts as an injunction against efforts to collect those debts from you as a personal liability. It does not describe the co-signer's separate promise to the same creditor, and it does not cancel liens on property. Bankr. D. Md.'s legal overview puts the effect plainly: the debtor is no longer personally liable for repaying the debts. That is the whole scope of the relief. So if your sister co-signed your car loan, the lender generally still holds her signature and can generally look to her for the balance once your own liability is gone. Practically, this is why co-signed accounts are often the debts people worry about most, and why they belong at the front of any conversation with a lawyer rather than at the end.

• The discharge injunction under 11 U.S.C. § 524(a)(2) runs to your personal liability, not another person's.
• Liens survive discharge, so secured collateral can still be foreclosed or repossessed.
• Domestic support obligations owed to a spouse or former spouse are not dischargeable.

What is the Chapter 13 codebtor stay, and what does it do?

Chapter 13 has a protection Chapter 7 does not. Under 11 U.S.C. § 1301(a), after the order for relief a creditor generally may not act, or begin or continue any civil action, to collect all or part of a consumer debt of the debtor from any individual who is liable on that debt with the debtor or who secured it. Two carve-outs appear in the statute itself: it does not apply where that individual became liable in the ordinary course of their own business, and it does not apply once the case is closed, dismissed, or converted to Chapter 7 or 11. The creditor keeps a narrow right under § 1301(b) to present a negotiable instrument and to give notice of dishonor. Chapter 12, for family farmers and fishermen, contains a parallel codebtor stay at 11 U.S.C. § 1201. Nothing comparable appears for Chapter 7 filers.

Can a creditor get around the codebtor stay?

Yes, and the statute says how. Under 11 U.S.C. § 1301(c), on request of a party in interest and after notice and a hearing, the court must grant relief from the codebtor stay to the extent that (1) as between you and the protected individual, that individual actually received the consideration for the creditor's claim, (2) the plan you filed proposes not to pay the claim, or (3) the creditor's interest would be irreparably harmed by continuing the stay. There is also a deadline that catches people out. Under § 1301(d), twenty days after a request is filed under subsection (c)(2), the stay terminates as to the party making the request unless you, or any individual liable on the debt with you, files and serves a written objection to the proposed action. Bankr. D. Md. notes that a motion for relief from the codebtor stay is governed by 11 U.S.C. § 1301.

• Relief is granted only to the extent one of the three statutory grounds applies.
• The § 1301(c)(1) ground targets the situation where the filer is really the co-signer and someone else got the benefit.
• The twenty-day objection window under § 1301(d) runs whether or not you are the one who objects.

What happens to a joint debt when only one spouse files?

The non-filing spouse's own liability on a joint account generally continues, because the discharge addresses the filing debtor. Married couples are not required to file together. Under 11 U.S.C. § 302(a), a joint case is commenced by filing a single petition by an individual and that individual's spouse, and the accompanying legislative history is explicit that one spouse cannot take the other into bankruptcy without the other's knowledge or consent. Where a joint case is filed, § 302(b) requires the court to determine the extent, if any, to which the two estates are consolidated. Community property adds a further layer: under 11 U.S.C. § 524(a)(3), a discharge operates as an injunction against collecting an allowable community claim from certain after-acquired community property described in 11 U.S.C. § 541(a)(2), with exceptions in § 524(b) and for debts excepted from discharge.

• A joint case is one case with one filing fee, not two separate cases.
• The court decides how far the two estates are consolidated under § 302(b).
• Official Form 106H tells joint filers not to list a spouse as a codebtor.

Can my Chapter 13 plan treat a co-signed debt differently?

A Chapter 13 plan can shape how a co-signed claim is handled, and that choice interacts directly with the codebtor stay. Section 1301(c)(2) makes a plan proposing not to pay a claim a ground for lifting the stay as to that creditor. Read the other way, a plan that does propose to pay a co-signed consumer claim removes that particular ground. The mechanics of classification are a legal question and a district-specific one; we do not publish a verified summary of every plan-classification standard, so treat it as a question for a lawyer rather than something to settle from a web page. What we can say from the Code is the shape of the tradeoff: paying a co-signed debt through the plan keeps the protection intact and consumes plan dollars, while proposing not to pay it opens the door to the creditor pursuing your co-signer.

• The plan's treatment of a claim is itself a statutory ground for stay relief under § 1301(c)(2).
• Protecting a co-signer through plan payments has a cost to your other creditors and to your budget.
• Bring the actual loan documents; who signed what drives the analysis.

Does this answer change from state to state?

The codebtor stay and the effect of a discharge are federal, so the core answer is the same everywhere. State law still shows up around the edges. Community property states change how property and community claims are treated, and Official Form 106H asks whether you have lived in a community property state or territory in the last eight years, listing Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Puerto Rico, Texas, Washington, and Wisconsin. Some states legislate specifically about joint filings and exemptions. Minnesota, for example, addresses joint and individual spousal petitions in Minn. Stat. § 550.371, though that section carries a note that it was found unconstitutional in In re Soby, 37 B.R. 522 (Bankr. D. Minn. 1984). Exemption amounts and local filing practice live on the state pages, not here.

• Community property status affects § 524(a)(3) and what you disclose on Schedule H.
• Local rules and forms vary by district; check your court's packet.
• State exemption figures are published on the state hub pages.

What documents and information does this involve?

Co-signers are disclosed on a specific schedule, so the paperwork is concrete. Schedule H: Your Codebtors (Official Form 106H) asks whether you have codebtors, whether you have lived in a community property state in the last eight years, and then requires you to list each codebtor in Column 1 alongside the creditor in Column 2, cross-referenced to the line on Schedule D, Schedule E/F, or Schedule G where that creditor appears. If you are filing jointly, the form tells you not to list either spouse as a codebtor unless that person is separately a guarantor or cosigner. Schedule E/F also asks who incurred each debt and offers a community-debt checkbox. Court instructions note that a claim is contingent where you are not obligated to pay unless something happens later, using a co-signed note as the example.

• Official Form 106H: Schedule H, Your Codebtors.
• Schedule D, Schedule E/F, and Schedule G, which Schedule H cross-references.
• The loan agreements and account statements showing exactly who signed.
• Any judgment, repossession notice, or garnishment paperwork naming a co-signer.

What should I ask a lawyer about my co-signed debts?

Go in with your co-signed accounts written down and the documents in hand. The questions that actually move the analysis are narrow, and a lawyer who practices in your district can answer them quickly. Filing fees are also worth confirming early, since chapter choice drives the codebtor question: the Chapter 7 filing fee is $245 under 28 U.S.C. § 1930(a)(1)(A), (f)(1), plus a $78 administrative fee and a $15 trustee surcharge, while the Chapter 13 filing fee is $235 under 28 U.S.C. § 1930(a)(1)(B), plus a $78 administrative fee. Court guidance from D. Ariz. is direct that neither the court nor the clerk's office can give legal advice and that a pamphlet is not a substitute for advice specific to your situation.

• Which chapter fits my situation, and what does that mean for the people who signed with me?
• If I file Chapter 13, how would my plan treat each co-signed claim?
• How likely is this creditor to seek relief from the codebtor stay under § 1301(c)?
• My spouse is not filing. What happens to our joint accounts and, if we are in a community property state, to community claims?
• What do I need to put on Schedule H, and have I identified every codebtor?

Frequently asked questions

Does my bankruptcy hurt my co-signer's credit?

We do not publish a verified source on credit-reporting outcomes, so we will not guess. What the Code establishes is the legal position: your discharge addresses your personal liability under 11 U.S.C. § 524, and the co-signer's own obligation to the creditor is generally unaffected. That continuing obligation, and how the account performs, is what a creditor reports on. Ask a lawyer about your specific accounts.

Does the codebtor stay last for the whole Chapter 13 case?

Not necessarily. Under 11 U.S.C. § 1301(a)(2), the protection does not apply once the case is closed, dismissed, or converted to Chapter 7 or 11. Separately, the court must grant relief under § 1301(c) on any of three grounds, and under § 1301(d) the stay can terminate twenty days after a request based on the plan not paying the claim, unless a written objection is filed and served.

Is there any codebtor stay in Chapter 7?

No. The codebtor stay appears in 11 U.S.C. § 1301 for Chapter 13 and in 11 U.S.C. § 1201 for Chapter 12. There is no equivalent provision for Chapter 7, and § 1301(a)(2) expressly ends the Chapter 13 protection if a case converts to Chapter 7. That difference is one reason people with co-signers often want to discuss chapter choice with a lawyer before filing.

Can my spouse file bankruptcy without me?

Yes. A joint case under 11 U.S.C. § 302(a) requires a single petition filed by an individual and that individual's spouse, and the legislative history states that one spouse cannot take the other into bankruptcy without the other's knowledge or consent. Filing individually is available. Where a joint case is filed, § 302(b) requires the court to determine how far the two estates are consolidated.

Do I have to list my co-signers in the paperwork?

Yes. Official Form 106H, Schedule H: Your Codebtors, directs you to list all of your codebtors and the creditor for each debt, cross-referenced to Schedule D, Schedule E/F, or Schedule G. Court instructions also warn that debts neither listed nor scheduled can fall under an exception to discharge in 11 U.S.C. § 523(a)(3). Accuracy here matters more than speed.

Does a divorce decree assigning a debt to my ex protect me?

Generally not as against the creditor. Bankr. N.D. Iowa's guidance states that provisions of a divorce decree requiring the debtor to make payments to certain creditors are generally not binding upon creditors, and that a creditor may have a claim against you for an unpaid balance if you are liable on the debt with the debtor, or may exercise state-law rights such as repossession or foreclosure.

What does it cost to file, and does chapter choice change that?

The Chapter 7 filing fee is $245 under 28 U.S.C. § 1930(a)(1)(A), (f)(1), with a $78 administrative fee and a $15 trustee surcharge. The Chapter 13 filing fee is $235 under 28 U.S.C. § 1930(a)(1)(B), with a $78 administrative fee. Section 1930(a)(1)(B) permits installment payment for an individual commencing a voluntary or joint case; the statutory Chapter 7 waiver does not apply to Chapter 13.

Sources

• 11 U.S.C. § 1301 — Stay of action against codebtor · official source
• 11 U.S.C. § 524 — Effect of discharge · official source
• 11 U.S.C. § 302 — Joint cases · official source
• 11 U.S.C. § 1201 — Stay of action against codebtor (Chapter 12)
• 11 U.S.C. § 541 — Property of the estate · official source
• 11 U.S.C. § 523 — Exceptions to discharge · official source
• Bankr. D. Md. official page — Filing a Motion for Relief from the Automatic Stay
• Bankr. D. Md. official page — Legal Overview
• Bankr. E.D. La. official guidance — Chapter 7 Form Packet
• Bankr. E.D. Mich. official guidance — A Guide for Pro Se Filers
• Bankr. N.D. Iowa official page — Filing Without an Attorney: Other Interested Parties
• U.S. Bankr. Ct. D. Ariz., Choosing Your Chapter: What can Bankruptcy do for you? What will it do to you?
• U.S. Bankr. Ct. D. Ariz., Instructions for Completing the Bankruptcy Petition, Schedules and Statements
• Minn. Stat. § 550.371
• 28 U.S.C. § 1930(a)(1)(A), (f)(1)
• 28 U.S.C. § 1930(a)(1)(B)
• Bankruptcy Court Miscellaneous Fee Schedule, Item 8
• Bankruptcy Court Miscellaneous Fee Schedule, Item 9

Related

• Chapter 13
• Chapter 7
• Which debts get discharged
• The automatic stay
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