A common question that I get is, “What is a co-debtors stay in bankruptcy?”
Co-debtor Stay in Bankruptcy for Vehicle or an Asset
So, the co-debtors stay, what that does is protects a co-borrower. Frequently, there are co-borrowers on mortgages, student, loans, and vehicles. So if a vehicle is behind and one person files for bankruptcy then the cosigner or co-debtor on the vehicle is protected. Meaning they don’t have a negative mark on their credit report based on the delinquency of the vehicle.
Co-debtor Stay in Bankruptcy for Student Loans
The same holds true for co-debtors and student loans. Student loans are a very large expense for a lot of people and oftentimes, especially with private loans, there is a co-debtor or co-borrower. And in the event a student loan borrower files for bankruptcy, that co-debtor or co-borrower is protected from any collection effort even though they did not file the bankruptcy themselves.
Co-debtor Stay in Bankruptcy for Mortgage and Homeowners
The same holds true with mortgages. If you have two people on a mortgage, one person files for bankruptcy and the other one does not, the person who did not file is still protected from foreclosure and collection efforts because of the bankruptcy filing.
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