Texas Bankruptcy Blog : Texas Bankruptcy Lawyer & Attorney : Fears Nachawati law Firm : Chapter 7, Chapter 13, Consumer Bankrutpcy : Dallas, Fort Worth, Austin, Houston, San Antonio

 A Chapter 13 bankruptcy case will generally last three to five years. A lot can happen in that time, especially for an individual who is attempting to deal with serious financial difficulties. In some cases, a financial setback can cause a Chapter 13 debtor to be unable to pay the monthly Chapter 13 plan payments or perhaps payments to a secured creditor. Since the practical effect of the Chapter 13 plan stretches the debtor’s finances thin, a financial hiccup can be a death blow to a Chapter 13 case.

If you get behind on your plan payments, it is important to discuss your situation with your bankruptcy attorney. If you simply miss one payment to the bankruptcy trustee, you may be able to ask permission from the court to skip a plan payment. More than one missed payment will have to be paid to continue your bankruptcy. If your case is dismissed due to your inability to make your plan payments, you will generally be able to reinstate the case after paying all due plan payments, or you may choose to re-file your Chapter 13 case.

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Re-filing your case can get complicated. If you get behind on post-bankruptcy payments to a secured creditor, the creditor may file a request for relief from the automatic stay. You are generally ineligible to file bankruptcy for 180 days if your case is dismissed by the court either for failure to obey a court order or via a voluntary dismissal after a motion for relief from the automatic stay has been filed.

Additionally, in 2005 Congress enacted new laws to combat “serial” filers who abuse the bankruptcy laws by filing consecutive bankruptcy cases to frustrate creditors. Essentially, if you file a bankruptcy case within one year of an earlier dismissed case, the automatic stay in the second case terminates 30 days after the filing, unless you are able to demonstrate that the second case was filed in good faith. A subsequent case filed within the same one-year period penalizes the debtor by foregoing the automatic stay entirely, until the debtor shows that this third filing was made in good faith.

If you have trouble making payments to the trustee or to a secured creditor during your Chapter 13 bankruptcy, contact your bankruptcy attorney and discuss your options. Your attorney is able to propose solutions to protect your property and help remedy your financial troubles.

 In 2005, Congress passed new laws making it more difficult for wealthy individuals to relocate and take advantage of another state’s more liberal exemption laws. In the past millionaires facing financial difficulties (and sometimes criminal charges of fraud) could relocate to another state, purchase an expensive home, and file bankruptcy while applying the state’s generous exemption laws to protect assets from creditors. In it’s zeal to close the loopholes that allowed a few wealthy people to cheat the system, Congress created a confusing and a bit nutty set of rules to determine what state’s exemption laws apply in a bankruptcy case.

First, the easy answer: if you have resided in only one state for more than 730 days, you must use that state’s exemption laws. To make things a little more complex, if you reside in Arkansas, Connecticut, District of Columbia, Hawaii, Massachusetts, Michigan, Minnesota, New Jersey, New Mexico, Pennsylvania, Rhode Island, South Carolina, Texas, Vermont, Washington, and Wisconsin, you are allowed a choice between your state law exemption and a set of federal exemptions.

Second, if you have not resided in your state for at least 730 days, the exemption law that applies is the state in which you lived most of the time during the 180 days prior to the 730 days. In other words, where did you live most of the time between two and two-and-a-half years before filing? See, I told you this calculation is a bit nutty.

Finally, if the above tests can’t decide the issue, the default rule is to use the federal exemptions only. This may be the case if you have lived overseas, or if a state requires current residency or domiciliary to use its exemptions (such as the state of New York).

The Bankruptcy Code is written by the United States Congress and is interpreted by federal court judges. Consequently, it is a set of laws that are often confusing. If you are in over your head in financial difficulty, call today and get help from a seasoned professional. An experienced bankruptcy attorney can guide you through the federal bankruptcy process without stepping on a procedural land mine.

 On July 21, 2011, the United States Consumer Financial Protection Bureau (CFPB) quietly opened its doors for business. Most Americans do not know about this new agency; however the CFPB is a powerful ally for consumers and represents an important step in restoring balance between big business and the consumer. The CFPB is a federal agency tasked with the primary responsibility for regulating consumer protections in the United States.

The CFPB was born from the financial turmoil that our country has recently witnessed, and is charged with promoting "fairness and transparency for mortgages, credit cards, and other consumer financial products and services." According to the CFPB website, "The central mission of the Consumer Financial Protection Bureau is to make markets for consumer financial products and services work for Americans—whether they are applying for a mortgage, choosing among credit cards, or using any number of other consumer financial products."

The point of the CFPB is to have a central agency serve as a watchdog over consumer financial bureaus such as banks, credit unions, securities firms, payday lenders, mortgage-servicing operations, foreclosure relief services, debt collectors and other financial companies. The CFPB creates and enforces bank rules, conducts bank examinations, monitors and reports on financial markets, and collects and tracks consumer complaints. These tasks were previously divided among various federal agencies.

According to its new director, former Ohio attorney general Richard Cordray, the immediate concerns for the Consumer Financial Protection Bureau are mortgages, credit cards and student loans. The CFPB website at http://www.consumerfinance.gov/ provides a wealth of consumer financial information. The site also takes complaints regarding credit card companies on issues such as unfair practices such as hidden fees, interest rate changes, payment increases or other issues.

If you are in financial distress, consult with an experienced bankruptcy attorney and discuss how the law and your government can help you. There are many consumer protections available under the federal and state laws; some of the most powerful are part of the federal Bankruptcy Code. Call today and get the help you need, or schedule a consultation using  our 24 Hour bankruptcy chat.

Since changes were made to the bankruptcy laws in 2005, debtors in bankruptcy have been required to complete both a pre-bankruptcy credit counseling interview and a course in personal financial management. Some bankruptcy professionals have questioned whether these requirements have any positive impact on the debtor. One recent study suggests that they do.

University of Illinois economist Angela Lyons completed a bankruptcy study that measures the impacts of both the counseling and education requirements by tracking debtors through the entire bankruptcy process.

We looked at about 4,000 debtors across the U.S. who filed for bankruptcy,” said Lyons. “We learned that the counseling and education requirements appear to be serving their intended purpose and are likely viable mechanisms to help debtors deal with their financial situation and get the fresh start that they need.”

Lyons’ findings show that most participants in the study improved their financial behaviors after counseling, and also continued those behaviors 12 months later. She says, "From an educational perspective, the findings provide valuable insight into how the requirement is helping to improve debtors' personal financial situations, learn from their mistakes and go on to make sound financial decisions in life."

This information is consistent with what bankruptcy attorneys see every day. Many bankruptcy debtors initially resent these courses. However, most debtors report that they learn useful information and consider the time worthwhile. Both the credit counseling class and the personal financial management course can be taken either in-person, on-line, or over the telephone. The costs are generally less than $50 each. Each credit counseling agency or financial management course must be approved by the Office of the United States Trustee.

The credit counseling interview and the course in personal financial management are not only required for completing your bankruptcy case, they are also important to your future financial success. Your attorney can help you choose an approved credit counseling agency to assist with the Bankruptcy Code’s educational requirements.

People who use the bankruptcy laws most successfully are generally those with the best attitudes and the proper perspectives. As one writer asked, "Is the glass half empty, half full, or twice as large as it needs to be?" Bankruptcy can be a negative, a positive, or simply the right response to your financial problem.

The bankruptcy process can have many positive results for a person with the right perspective. Below are a few examples:

1. Bankruptcy generally discharges most or all of your unsecured debts, such as medical bills or credit card balances. Once your debt is discharged, you are no longer under a legal obligation to pay.

2. Bankruptcy immediately and automatically stops all collection action, and provides time to reorganize your finances. This "automatic stay" applies to lawsuits, foreclosures, garnishments, pending repossessions, telephone harassment, etc. In some cases a bankruptcy filing may even force a creditor to return a repossessed vehicle.

3. A bankruptcy filing also prevents a utility company from turning off your gas or electric services. If these necessary services have been cut off, the bankruptcy requires the utility company to restore service.

4. If you are behind on mortgage payments, the bankruptcy will allow you time to catch up.

5. In many cases it can fix an upside down auto loan. You may save hundreds of dollars each month in payments and keep your vehicle.

6. The protections afforded by the federal bankruptcy laws can shift the balance of power from the creditor back to you. Creditors must prove claims and seek permission from the bankruptcy court before collecting.

If you are buried in debt and need professional help, consult with an experienced bankruptcy attorney to learn your options. The federal bankruptcy laws may be exactly the right tool to correct your financial problem.
 

All bankruptcy debtors will tell their bankruptcy attorneys about cases in which they are defendants. Debtors are always anxious to stop a lawsuit and rid themselves of any dischargeable obligations.

The problem with lawsuits usually arises when the debtor is the plaintiff, or has a claim that has not yet been filed. For instance, suffering a personal injury caused by someone else and then filing bankruptcy to get rid of the medical bills.

Both a plaintiff’s lawsuit and a potential lawsuit are assets of the bankruptcy estate.

What happens to the plaintiff’s claim during bankruptcy can depend on a number of circumstances.

In some cases the bankruptcy attorney can exempt a portion or even all of the money received from winning or settling the lawsuit. In other cases the bankruptcy trustee may consider the lawsuit or potential lawsuit of little potential value to the bankruptcy estate (and your creditors), and may abandon the estate’s interest in the suit or claim.

The Bankruptcy Code requires the debtor to disclose all pending lawsuits and claims, whether as a plaintiff or a defendant. Failing to disclose a claim can cause serious headaches for both the bankruptcy attorney and the plaintiff attorney. Whether the failure to list the claim was intentional or an unintentional error, omitting a pending or potential lawsuit is the same as representing to the bankruptcy court that the debtor does not own the asset or have the right to sue. One appellate court said, that “a debtor in bankruptcy who denies owning an asset, including a chose in action or other legal claim, cannot realize on that concealed asset after the bankruptcy ends.” The legal term for this situation is “judicial estoppel,” and it can terminate your right to sue.

If you have a pending or potential lawsuit, discuss your situation with your bankruptcy attorney. Your attorney can advise you on your legal options for discharging your debts and keeping your lawsuit proceeds. Pending lawsuits is actually common, and an experienced bankruptcy attorney can guide you through the legal maze without terminating your rights.

About half-way through your bankruptcy schedules you will discover "Schedule G - Executory Contracts and Unexpired Leases." While the Bankruptcy Code does not have a specific definition of an executory contract, it is commonly understood as a contract between the bankruptcy debtor and another party in which the terms have not been completely performed. If one party fails to complete the unperformed terms, the contract would be breached.

The most common type of executory contract is a lease for real estate, a car, or for business equipment. Contracts for work not yet performed and intellectual property issues (like an author on retainer to write a book) also fall under the executory contract category. All executory contracts must be listed on Schedule G.

Once the bankruptcy case is filed, the debtor or the bankruptcy trustee can reject, affirm, assume or surrender the executory contract. For example, if a bankruptcy debtor was paid a $1,000 deposit on a $10,000 kitchen remodel job, but has not started work, the debtor has a decision to make. The debtor has the option to do the job and honor the contract, or to walk away. Likewise car leases, home rental agreements, and other executory contracts are handled in much the same manner.

If the debtor decides to continue performance (called "assuming" the contract), an assumption of the contract must signed by the debtor and other party and filed with the bankruptcy court. In a Chapter 7 case, an assumption on an executory contract must generally be filed within 60 days of the bankruptcy filing date. The debtor must also pay any past due amount due under the contract in full and show the ability to perform the outstanding contract terms. During the 60 day period, the "other party" to the executory contract is under an obligation to continue performing as if no bankruptcy had been filed.

While many executory contracts are run-of-the-mill type, some can get complex. If you have an executory contract and are considering a bankruptcy filing, discuss your situation with a seasoned bankruptcy attorney. Your attorney can offer solutions to restructure your finances and deal with your executory contract.
 

Equity is a very important term when discussing your personal assets. Generally, equity is the difference between the market value of an item and the amount of the claims against it. For instance, if your car is worth $5,000, and your auto loan balance is $3,000, then you have $2,000 in vehicle equity. If you own the vehicle jointly with your mother, you have $1,000 in vehicle equity.

Equity is a common issue during bankruptcy, since the debtor is allowed to keep certain modest possessions. Once the amount of equity in an item of property is determined, the debtor can apply legal exemptions against the equity to protect the asset from the bankruptcy trustee and creditors.

When calculating equity, it is vital to not over-value the asset. For some items there are resources, such as the NADA Price Guide for automobiles. For other items you may need to do some investigation. Ebay is a good resource for collectibles. For real estate it may be necessary to speak to a realtor or conduct an appraisal to discover the market value.

Many bankruptcy debtors over-value furniture and jewelry. Most furniture and jewelry immediately depreciates a great deal after purchase. A used sofa may have cost you $700 at the furniture store, but the market value is only what you would get from a yard sale or through Craigslist. Probably not anywhere near what you originally paid.

After determining the market value, the second step in figuring equity is to subtract any claims against the property. The most common type of claim is called a purchase money security interest (PMSI), a fancy term that means you used a lender’s money to buy the item and used the item as security for the loan. This is usually the case with a car loan or a home mortgage, but many other credit purchases could be considered PMSI. A non purchase money security interest (NPMSI) is a loan secured by property you already own. Some finance companies use furniture or other property owned by the borrower to secure personal loans. Finally, a tax lien against real estate or even personal property may affect your equity, as can some legal judgments.

Once your equity is calculated, the next step is to apply legal exemptions to the equity. Most debtors are able to protect all of their equity using legal exemptions. If there is unprotected equity, the trustee must make a decision whether the amount of equity available is worth his time and will actually benefit creditors. Statistically bankruptcy trustees only take property or assets from debtors in about one out of every twenty five Chapter 7 cases.

It is very important to accurately calculate the amount of equity in your property. Discuss all of your property, its market value, and your legal claims with your attorney. Your attorney can then advise you on the best way to protect the property from creditors.
 

 If you are struggling with debt, chances are you are feeling powerless. Collection agents are skilled at making you feel stressed and hopeless through embarrassing phone calls at work and home; threatening letters; and sometimes legal action. The collection companies want you to feel that your only choice to stop the harassment is to “pay up.”

Fortunately, there is another option. The federal bankruptcy law can stop creditor harassment and put you back in control over your finances. The first way the Bankruptcy Code helps is by imposing an “automatic stay” against collection action against you. The automatic stay is an injunction issued by the United States Bankruptcy Court immediately upon filing your bankruptcy case. No hearing is necessary. This stay applies to creditors whether or not they have actual knowledge of your bankruptcy filing.

The purpose of the automatic stay is to give the “debtor a breathing spell from his creditors, stopping all collection efforts, all harassment, and all foreclosure actions. It permits the debtor to attempt a repayment or reorganization plan, or simply to be relieved of the financial pressures that drove him into bankruptcy.” See Notes of Committee on the Judiciary, Senate Report No. 95-989. The breathing spell provides time for the debtor, the bankruptcy trustee, and the bankruptcy court to get a handle on the debtor’s financial problem and work out an appropriate solution.

The automatic stay prohibits a creditor with a claim that arose before commencement of the bankruptcy case from taking many actions, including:
• contacting the debtor to request payment (stops collection calls)
• initiating or continuing a lawsuit against the debtor (stops lawsuits)
• enforcing a judgment against the debtor (stops wage garnishments)
• repossessing personal property or foreclosing on real estate (stops repossessions and foreclosure)

The automatic stay is a temporary injunction which will last until either the bankruptcy judge lifts the stay at the request of a creditor; the debtor receives a discharge; or an item of property is no longer property of the estate. Lifting the stay requires notice and a hearing. There are a few exceptions to the automatic stay, for instance: the automatic stay does not prevent criminal prosecutions. Likewise the automatic stay does not stop lawsuits to establish or modify alimony, maintenance, or support.

The automatic stay stops creditor collection action immediately, and puts you back in the driver’s seat. The automatic stay provides you time to work out a plan to either discharge or repay your debts, and can also give you leverage when negotiating with your creditors. By working with an experienced bankruptcy attorney, the automatic stay is a powerful tool to restructure your finances and provide you with peace of mind.

 Renting a house or apartment after your bankruptcy discharge can be a little intimidating. Most landlords will run a credit check during the application process, and a bankruptcy may be considered a factor in deciding whether to rent to a prospective tenant. So what can you do to increase your chances of being approved?

First, be prepared to address the issue. How your application is handled will depend on the landlord. If you are dealing with a large apartment complex owned by a distant corporation, ask the manager about the rental process and whether your bankruptcy discharge will disqualify you. The company likely has a policy regarding applicants with bankruptcy on their credit report.

On the other hand, if you are dealing with an individual landlord, you may be able to discuss the circumstances surrounding your bankruptcy filing. An individual landlord will be more flexible and perhaps willing to overlook a bankruptcy filed to discharge overwhelming debt as a result of events outside of your control, such as medical debt, job loss, etc. Demonstrating stable employment, solid references, and a good history of rental payments can go a long way in off-setting the bankruptcy on your credit report.

Finally, money talks! Providing the requested security deposit and paying your rent several months ahead will enhance your chances of being approved. Even a complex with an inflexible policy may be able to make an exception when the tenant is able to pay in advance. The bottom line is that the landlord needs to believe that you will pay your rent on time. The more assurance you can give, the more likely your rental application will be approved.

If you need to discharge overwhelming debt, but worry about how the bankruptcy will affect your credit, your career, or your living situation, consult with an experienced bankruptcy attorney and get the facts. The bankruptcy process is widely misunderstood. An experienced bankruptcy attorney can answer your questions so that you can make a wise decision regarding your debt problem.

Many bankruptcy debtors need a credit card for work. Whether it is necessary for business purchases or travel, it is common for a debtor to ask, “Can I keep one of my credit cards?”

The answer to this question depends on a few circumstances. First, is there a balance on the card? If your card balance is zero on the day that you file your bankruptcy, then the credit card company is not a “creditor” for bankruptcy purposes, and you do not have to list the card as a debt in your bankruptcy schedules. Consequently, the credit card company will not receive notice of your bankruptcy case.

Before you pay down your credit card debt, be advised that substantial payments to creditors shortly before filing bankruptcy could cause a serious problem. Large payments to a creditor within 90 days of your bankruptcy filing may be avoided by the bankruptcy trustee. The trustee could compel the turnover of money paid to your credit card company and then divide it between all unsecured creditors (after the trustee takes a cut, of course). If you are considering a bankruptcy filing, speak to an experienced bankruptcy attorney before making large payments to any creditor.

The second circumstance to consider is, will the credit card company find out about your bankruptcy filing and cancel your card? Credit card companies perform periodic credit checks of customers to minimize risk. You may be able to keep your pre-bankruptcy credit card for a time, but then discover your card has been cancelled at an inconvenient time.

Finally, what type of bankruptcy case are you filing? In a Chapter 13 case, the debtor is prohibited from incurring any new debt without the approval of the trustee and bankruptcy court. Using credit during a Chapter 13 case can land you in trouble with the court, and your case could be dismissed.

Keeping a credit card after bankruptcy is often tricky business. Fortunately, many Chapter 7 debtors receive credit card offers soon after discharge, in some cases from the same companies they recently discharged. The usual advice is to discharge all of your unsecured creditors. If you need a credit card for work, apply for a new card or open a secured credit card account.
 

Wor*ry*wart - noun: a person who is inclined to worry unduly.

Some clients are content to turn over their financial problems to a bankruptcy attorney and experience immediate peace of mind. Others cannot stop worrying until the case is discharged and closed. Everyone is different. Fortunately, most bankruptcy cases are very predictable. Before the case is filed your bankruptcy attorney should explain the process and prepare you for certain events that will occur.

Your attorney is in constant contact with the bankruptcy court and receives electronic notices concerning your case. In most cases, a bankruptcy debtor represented by an attorney will not receive correspondence through the mail from creditors, the bankruptcy trustee, or from the bankruptcy court. Instead, your attorney is required to keep you informed concerning the status of your bankruptcy case, and you will be contacted concerning important changes to your bankruptcy case. Notices such as the date of your Meeting of Creditors, or your discharge, will be sent to you along with other important information.

For the worrywart, the federal bankruptcy courts provide access to case information via the Public Access to Court Electronic Records, or PACER system. Through PACER, anyone can obtain information about a bankruptcy proceeding, including access to all documents and docket entries associated with the case. However, this information comes at a price. PACER charges $.08 per page. Some people have unknowingly racked up a substantial bill by constantly checking PACER for changes to a bankruptcy case.

If you choose to sign up for a PACER account to monitor your case, the general rule of thumb is to check your case only about once a week because bankruptcy cases generally move in a slow and orderly pace. Additionally, avoid clicking on every link, especially choosing to view large documents such as your petition and schedules (which could be 30-40 pages!). Instead, by choosing the docket report option you will see a synopsis of your case and it should cost less than a dollar per view.

Client access to PACER is not necessary for the typical bankruptcy case. You will receive important notices and information directly from your attorney and the streamlined nature of the bankruptcy process will quickly move your case to completion. Other the other hand, if you are a chronic worrier, an occasional check of your case on PACER may be just what the doctor ordered to provide you with peace of mind.
 

When you file either a Chapter 7 or Chapter 13 bankruptcy case, a “bankruptcy estate” is automatically created. The Bankruptcy Code defines the bankruptcy estate very broadly, and includes all of your legal or equitable interests in property. Your bankruptcy estate is the first step in determining what (if any) assets are available to pay creditors, and the administration of the bankruptcy estate is supervised by the bankruptcy trustee.

Some property is not included in the bankruptcy estate. For example:

The debtor's rights in spendthrift trusts, ERISA qualified retirement plans, and 401K plans are excluded by law from the bankruptcy estate;

Property that is not owned by the debtor, and which the debtor has no right to possess or control, is not part of the bankruptcy estate; and

A Chapter 7 debtor's wages are not part of the debtor's bankruptcy estate.

Property that is not part of a bankruptcy estate is, by definition, beyond the reach of creditors and the trustee.

Property included in the bankruptcy estate is under the supervision and legal control of the bankruptcy court and trustee. While actual possession of the property does not change hands, and you will not see any change in the day-to-day status of your ownership interest, it is important to understand that you are no longer in full control over your property. Selling or transferring property of the bankruptcy estate is prohibited without the court's permission. A tax refund that you are entitled to receive is also part of the bankruptcy estate, so speak to your attorney prior to spending any tax refund money you receive after your bankruptcy case is filed.

Property of the estate is generally protected through state or federal legal exemptions. While exempt property is still technically part of the bankruptcy estate, the legal exemption prevents creditors from collecting from exempt property. In order for a legal exemption to be effective, the property must be sufficiently identified and the appropriate legal exemption applied. Bankruptcy case law is full of examples of lazy debtors who fail to list property (including houses and cars!), and inept attorneys who fail to apply the correct exemption law. Often the bankruptcy courts have little sympathy for such carelessness and will deny the exemption, often costing the debtor thousands of dollars! The moral of the story is: fully disclose all property in your bankruptcy schedules.

In most cases the formation of a bankruptcy estate is simply a formality; the debtor generally is not aware of any change to the status of property rights. However, understanding the creation of the bankruptcy estate can prevent unnecessary complications in your bankruptcy case. The best and safest advice is to consult with your attorney before selling or transferring your property after filing bankruptcy.
 

Clients are often pleased to learn about one of the bankruptcy law's most powerful protections: the automatic stay. When a bankruptcy case is filed, the debtor receives immediate protection from creditor collection actions. This relief is known as the “automatic stay” because it immediately stops lawsuits, telephone harassment, and other attempts to collect on a debt. The automatic stay continues throughout the bankruptcy case until either the stay is modified by the court or the case ends.

But what about co-signors?

Most co-signors are considered "jointly and severally liable" for the debt. That means that each party is liable up to the full amount of the debt. If you file bankruptcy, your co-signor is typically on the hook for 100% of the outstanding debt. Contrary to a popular misunderstanding, the bankruptcy discharge does not "erase" a financial obligation. The discharge is a legal injunction that prohibits your creditors from enforcing your debts against you individually. The debt still exists, and can be collected from others who are not protected by the bankruptcy laws.

Filing a Chapter 7 bankruptcy case will not stop a creditor from collecting against a co-signor or co-debtor. However, a Chapter 13 bankruptcy case contains a protection known as the “Co-Debtor Stay.” This protection is meant to protect a debtor by insulating him from indirect pressures from his creditors exerted through friends or relatives. The Co-Debtor Stay stops all collection actions against any individual who is obligated on a consumer debt owed by the debtor. This protection continues until the Chapter 13 case has concluded, or the Co-debtor Stay is modified or lifted by the bankruptcy court. Typically, the Co-Debtor Stay will last the duration of the debtor's Chapter 13 bankruptcy case, or three to five years.

There are limits to the Co-Debtor Stay. The Co-Debtor Stay only prohibits collection on personal debts, not business obligations. Additionally, if your co-signor actually received the benefit of the debt, and your Chapter 13 plan proposes not to pay the debt, the creditor can seek to lift the stay. This is often the case when the bankruptcy debtor co-signed a loan so that a friend or family member could purchase a car. Of course, if the creditor is receiving timely payments on the loan, there is usually no issue or impact to the co-signor.

If you need bankruptcy relief, but are worried that your co-signors will be harmed, discuss the issue with an experienced bankruptcy attorney. Your attorney can recommend several options to consider when dealing with co-signors.