Unlike a Chapter 7 bankruptcy which discharges your obligations on unsecured co-signed debts, it is possible to protect a co-signor in a Chapter 13. There are several different ways that the co-signor can be protected. If the debt is a secured debt, you may want to continue making the regular monthly payments directly to the creditor to protect the co-signor. If the debt is unsecured, it can be paid in full through the Chapter 13 bankruptcy. This will protect the co-signor while you are in bankruptcy. However, the Chapter 13 bankruptcy will not pay the interest on the co-signed debt. Once you have completed your bankruptcy and receive a discharge, the creditor can collect the unpaid interest from the co-signor.
If you have a co-signed debt, it is important that you discuss this with your attorney. You have many options and an experienced bankruptcy attorney can help you to choose the best option for you.
If you are struggling due to debts that you co-signed on, contact us or give us a call today at (757) 276-6555. We will schedule you a free consultation with an attorney with almost 20 years of bankruptcy experience.