Some people become so burdened with debt that filing for bankruptcy seems to be the only way back to financial solvency. In your case, you might not shoulder your debt alone. One or more of your friends or relatives may have co-signed your loans or other debts.
Having a co-signer can help you secure a mortgage or a credit card if you have little to no credit history. However, a creditor can hold your co-signer responsible for fulfilling payments that you miss. Fortunately, Chapter 13 bankruptcy may be a solution if creditors are starting to harass your co-signer.
The co-debtor stay
Once you file for bankruptcy, a judge will likely impose an automatic stay. This stops your creditors from trying to collect money from you to pay off your debts. The automatic stay can not only protect your remaining assets, but it could save you from the emotional stress of dealing with creditor harassment.
The good news is that Chapter 13 bankruptcy offers the same kind of relief for your co-signer. Bankrate explains that bankruptcy law includes the co-debtor stay. Once a judge puts a co-debtor stay in place, creditors cannot try to collect payments from your co-signer in the event you stop making payments on your debt.
Regaining financial wellness with bankruptcy
With the co-debtor stay protecting your co-signer, you do not have to feel guilty about involving friends or family in your debt. You can use Chapter 13 to work out a repayment plan with your creditors. Over the next three to five years, you can focus on generating income to make debt payments. While bankruptcy may have its challenges, the final discharge of your debt can allow you and your co-signer to breathe a sigh of relief.