According to a Naperville bankruptcy attorney, debts under Chapter 13 where there is a cosigner are paid back either in full or less than in full. If the debtor decides to pay the creditor back in fall, then the creditor is prohibited from contacting or trying to collect against the co debtor. If however the debtor is paying that particular debt less than 100%, then the co-debtor’s stay does not exist. The creditor can bring a Motion to Modify the Automatic Stay to be able to pursue the co debtor for the portion that is not being paid through the Chapter 13 plan.
This unsecured debt where there is a cosigner is a separate class that the court will approve because it wants to protect the integrity of the system by allowing the debt to be paid back in full to protect the co debtor. If the debtor decides to pay back only 10% of the debt, then the creditor with court permission is free to pursue the co debtor. One unique thing about Chapter 13 is the co-debtor’s stay. The co-debtor’s state is the ability of one debtor to repay all of the debt through a Chapter 13 and protect the co debtor from any kind of contact from the creditor. The exception would be if the debtor is not paying back 100% through the plan. In those circumstances, the creditor has the right with court permission to pursue the co debtor for the amount that is not being paid by the debtor through the Chapter 13 plan.