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Creditor claims when you are a co-guarantor

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    Creditor claims when you are a co-guarantor

    I was just curious. If you file a chapter 13 bankruptcy you are required to include all debts including personal guarantees. How would a creditor calculate their claim if the payments are still being made on a debt by a different co-guarantor? Let's say you and your business partner both personally guaranteed a commercial lease. You decide to declare personal chapter 13 bankruptcy. Your partner would like to continue to retain the lease and make payments. The landlord does not wish to terminate the lease and is satisfied to continue operating under the same agreement. How would the lease holder's claim be calculated in the chapter 13 payment plan? If they do not file a claim they would still be obligated to release you from your personal guarantee correct?

    #2
    Originally posted by Brokensystem View Post
    How would the lease holder's claim be calculated in the chapter 13 payment plan? If they do not file a claim they would still be obligated to release you from your personal guarantee correct?
    A smart creditor would still file a claim for the value as of the filing date. It's that simple. Whether or not their claim is reduced by payments by another co-signer would only be an issue if the creditor is paid during the life of the Chapter 13. Some creditors are actually overpaid. Whether or not the Trustee or the debtor will catch overpayments to a single creditor are about as likely as the fact that the creditor could be overpaid.

    The co-debtor stay does not exist for non-consumer debt (11 USC 1306), so the creditor could continue to expect (demand) payments from the non-filing co-debtor.

    The creditor can continue as if nothing happened, but, the creditor would need to resist any attempt or even avoid any accidental attempt to collect the debt from the filing debtor as they re protected by the automatic stay.
    Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
    Status: (Auto) Discharged and Closed! 5/10
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    I am not an attorney. Any advice provided is not legal advice.

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