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Does Filing a Chapter 13 Bankruptcy Protect My Co-Signors?

  • By: Christopher Benson
  • Published: June 23, 2015

One big hurdle to bankruptcy for some individuals is their cosigner. If you weren’t able to secure a loan on your own for a home or car, or if you cosigned with a spouse, then that cosigner is held liable for the debt in a Chapter 7 bankruptcy.

Chapter 7 bankruptcy eliminates most debt in the form of a discharge, meaning that the individual who files is no longer legally liable for the debt. However, this is not true for the cosigner unless they are part of a married couple who file for bankruptcy together.

However, if you are looking for bankruptcy solutions that won’t impact a co=signor, Chapter 13 bankruptcy can help. In Chapter 13 bankruptcy, instead of receiving a discharge the individual creates a three- to five-year payment plan that includes all the debt. Since this debt is paid back instead of discharged, the cosigner is not enlisted to make good on the loan.

Another benefit of Chapter 13 bankruptcy is that you are allowed to roll in debts that are not eligible for discharge at all under Chapter 7 bankruptcy, allowing you time to make payments on debt that is not dischargeable in a Chapter 7 case. This could include DUI judgments, alimony, back support, court fines and criminal penalties,  and tax debt.

Over the past 23 years, the Law Offices of Christopher A. Benson has helped over 2,300 of Washington clients take control of their financial situation. We can stop your garnishment and change your monthly payments for all your combined unsecured debt, and if you have had more than $600 garnished within the last 90 days, we can get all of the money back in most cases. But you have to act quickly–call (253) 815-6940 for your free consultation, or email us today. Evening and weekend appointments available.

Christopher Benson

About the Author Chris served on the Board of Directors for Habitat for Humanity
Seattle/S. King County for 10 years and served as Vice President
of the organization during part of that time. Read More