QUESTION
Can creditors still report on a co-debtors credit during a bankruptcy stay? How?
Asked on Sep 14th, 2015 on Bankruptcy - Colorado
More details to this question:
My husband filed bankruptcy and I did not. We have a credit line loan that we obtained before we were married. His attorney gave us bad advice and said I would not be responsible after the stay is lifted. We found that I am. Can the loan company report late payments to my credit during the stay? His bankruptcy was just discharged this month and the bank contacted me saying they have been reporting late to my credit all along.
4 ANSWERS
Since you did not file bankruptcy, you cannot climb on board and claim a free ride from your credit responsibilities as a result of your spouses bankruptcy. The creditors can report you failure to pay on your credit because you remain 100% responsible for any joint debts.
Answered on Sep 15th, 2015 at 11:04 AM
Commercial & Bankruptcy Law Attorney serving Powell, OH
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Ronald K. Nims
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The codebtor stay only stops creditors from reporting late payments if the debt is being paid through the plan.
Answered on Sep 15th, 2015 at 10:36 AM
Derek W. Freeman
If you're a co-signor on a loan and the primary files bankruptcy, you are now the only debtor on the loan. Generally, in order for a creditor to collect from you, it has to file a motion in the Bankruptcy Court for relief from stay. However, since you aren't a party in the bankruptcy case, they can collect from you even without filing such a motion. So yes, they can report that you haven't been making payments, since you haven't been making payments.
Answered on Sep 14th, 2015 at 4:06 PM
Yes, that's permissible.
Answered on Sep 14th, 2015 at 3:35 PM