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The co-debtor stay under 11 U.S.C. Section 1301 is a unique protection available only in Chapter 13 bankruptcy. When you file Chapter 13, the automatic stay protects you -- but Section 1301 goes further by also protecting co-signers, co-obligors, and guarantors on your consumer debts from collection activity during your case.
This site will explain how the co-debtor stay works, who it protects, and its limitations. We will cover the three grounds under Section 1301(c) on which a creditor can seek relief from the co-debtor stay, the requirement that the protected debt be a consumer debt (not a business debt), and how courts distinguish between consumer and business obligations.
If you have a parent who co-signed a car loan, a spouse who is jointly liable on a credit card, or a friend who guaranteed a personal loan, the co-debtor stay may be one of the most important reasons to choose Chapter 13 over Chapter 7. We will explain when it applies and when it does not.
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