Co-debtor question

[lgeiger99]

I listed a bank I owe money to in my Chapter 13. My daughter is a codebtor on the debt. My question is in regards to codebtor stays of protection. My plan is zero repayment to unsecured creditors (and the debt is unsecured).

I filed Chapter 13 June of 2010. The debt never showed up on daughters credit report. April 2012 the debt is now on her credit report.

I talked to the collection agency and they said they will remove the negative from daughter's credit report within 90 days of my plan completion (three years out).
She needs it removed now.

Is the credit agency in the right? Can they hold my daughter responsible for a debt that I am charging off to a Chapter 13? Can I force them to remove the negative tradeline from my daughters credit report?

Thanks in advance for any advice you can give.

[MSbklawyer]

I listed a bank I owe money to in my Chapter 13. My daughter is a codebtor on the debt. My question is in regards to codebtor stays of protection. My plan is zero repayment to unsecured creditors (and the debt is unsecured).

I filed Chapter 13 June of 2010. The debt never showed up on daughters credit report. April 2012 the debt is now on her credit report.

I talked to the collection agency and they said they will remove the negative from daughter's credit report within 90 days of my plan completion (three years out).
She needs it removed now.

Is the credit agency in the right? Can they hold my daughter responsible for a debt that I am charging off to a Chapter 13? Can I force them to remove the negative tradeline from my daughters credit report?

Thanks in advance for any advice you can give.

Since your daughter is a co-debtor, she is as much liable for this debt as you are. Your bankruptcy only discharges YOUR personal liability for the debt; it has no effect on your daughter's liability for the debt. Now, that being said, they cannot attempt to collect it from her without filing a motion to have the co-debtor stay lifted.

[lgeiger99]

Thanks for the reply; I really appreciate it.

I called them and told them they were in violation of the stay of protection offered co-debtors in Chapter 13's. They have to think about it and call me back. So they will either remove it or refuse.

I'm assuming I will have to notify the trustee they are in violation of the stay if they don't comply? And that may compel them to file a motion to lift the stay?

And if they do remove the negative information, I understand they will come after her when my Chapter 13 is completed, is that right?

I'm wondering how this is going to play out.

Thanks again for your help.

[HHM]

Daughter is still liable.

Note, the co-debtor stay only applies to "consumer" debts. So, what sort of debt is this?

But assuming it is a consumer debt, the collection agency cannot go after your daughter until the bankruptcy is either discharged, dismissed, or they get a motion to lift stay. But make no mistake, once the bankruptcy is done, daughter is on the hook.

[MSbklawyer]

I'm assuming I will have to notify the trustee they are in violation of the stay if they don't comply? And that may compel them to file a motion to lift the stay?

And if they do remove the negative information, I understand they will come after her when my Chapter 13 is completed, is that right?

I'd have to research it to be 100% sure, but I don't think that they are violating the co-debtor stay by reporting your daughter as delinquent on the debt.

[df04527]

Absoultely they are. If the daughter is protected by the stay they are in violation. The act of reporting the debt on her credit report is deemed an attempt to collect and must be removed. They have "to think about it?". I think not...call them and demand it's removal. They can do it immediatley don't let them fool you. Take it right up their food chain if you hear anything but we will remove it right away.

[MSbklawyer]

Absoultely they are. If the daughter is protected by the stay they are in violation. The act of reporting the debt on her credit report is deemed an attempt to collect and must be removed. They have "to think about it?". I think not...call them and demand it's removal. They can do it immediatley don't let them fool you. Take it right up their food chain if you hear anything but we will remove it right away.

Well, the co-debtor stay is not the same stay as the regular stay. It has its own code section. It is not nearly as broad as the §362 stay. Not saying you're wrong, I've just never dealt with the issue. I'm not sure you're right either, as to reporting the daughter as delinquent.

[lgeiger99]

Hi all,

It is a violation of the co-debtor stay that applies to Chapter 13 only. I did some research at the law library. They would have had to petition the court for relief of the stay. They didn't so even reporting to her credit report is a violation. It took two days and lots of time moving up the food chain. Finally, I got a manager to listen.

He said he needed three days. I told them they had to remove it by 4p.m. or I was going to contact the trustee (or file a motion, I hadn't decided which). They took it off then hemmed and hawed about overnighting the deletions to me. I was incredulous. Here they did something illegal which resulted in my daughter being turned down for housing, it took me two days to get figure it out and finally they had me fax them a copy of her credit report (just the page that showed her name and their negative tradeline).

I just said figure it out. It gets here by noon or I'll escalate it. I've got the tracking number and its on its way. By the way, they said they are also notified the 3 credit bureaus for me as well and are sending me a letter of deletion - which I can't think why they are doing. Maybe they re-aged the debt or something on me, I will have to pull a new credit report on me and look before I will know for sure.

I really appreciate all of your help. I don't come here often, but when I do its usually with a problem and the resources here steer me in the right direction.

Thanks!

Its interesting how many of the companies that I deal with don't understand Chapter 13. Real interesting.

[df04527]

Excellent and good for you! Keep the letter they are sending in case it re-appears. Now have your daughter try and re-qualify for whatever she was turned down for because of it. They also cannot CANNOT re-age the debt - that would again be a violation but you would have to prove it and the only way to do that is to get one of your bureau reports (NOT a third party report). The true bureaus report provides you with the DOFD (date of first default). That date should never change except in some circumstances which i won't go in to here but know the date shouldn't change. Good job!

[lgeiger99]

Thanks df04527! Your advice yesterday was very valuable to me.

[justbroke]

I missed all the excitement, but I agree that the reporting did (in fact) violate the co-debtor stay. I'm glad that you were able to get this removed.