I DON’T KNOW WHAT TO DO. I HAVE A TON OF CREDIT CARD DEBT AND I ALSO HAD MY MOTHER CO-SIGN A CAPITAL ONE ACCOUNT WHERE I OWE $10,000. I DON’T WANT THEM TO GO AFTER MY MOTHER. WHAT CAN I DO?
There are 2 options for you. TAIEBLAW would recommend the first option, since your mother would be protected by the co-debtor stay under section 1301.
If you file a Chapter 13 bankruptcy, you can separately pay Capital One over the life of the Chapter 13 plan in full since it is a reasonable classification. If you file Chapter 13 and don’t pay the debt back in full, then the creditor can move to lift the co-debtor stay, since the creditor’s interest is being harmed.
Thus, if you are not paying the creditor’s claim in full, the creditor is being harmed and they could lift the co-debtor stay and pursue your mother.
If you try to file a Chapter 7, there is no co-debtor stay protecting your mother at all. Then you are at the mercy of Capital One regarding payment arrangements since they always have the option of pursuing her.
In contrast while in the Chapter 13, you will have a set payment plan for a 3-5 year period and the debt will be satisfied once Capital One’s proof of claim is satisfied in the Chapter 13 plan.
Please note section 1301 only deals with co-signors on consumer debts. So if you have a co-signor on a business debt and want to protect your ex-partner’s interests, the co-debtor stay under section 1301 will not work.
Chapter 13 also gives you flexibility in classifying all types of debts so long as the classification is reasonable. Our Judges are very strict and now require special service for any type of special classification regarding a creditor’s claim.
If you have questions regarding this matter or any other matter contact TAIEBLAW at 856-235-4994, or visit our website at TAIEBLAW.COM.
Steven N. Taieb, Esq. has been a South Jersey Bankruptcy Attorney for over 33 years and is board certified in consumer bankruptcy law by The American Board of Certification which is accredited by The American Bar Association.