A co-debtor stay is a feature of Chapter 13 bankruptcy that is sometimes also referred to as a co-debtor automatic stay. Under a co-debtor stay, anyone who has cosigned loans or in any other way assumed some obligation for the debts of a person filing for Chapter 13 bankruptcy cannot be contacted by collection agencies until the Chapter 13 bankruptcy case is completed.

The co-debtor stay is designed to protect both the debtor and his or her friends and family. It's essentially a method for protecting debtors from being harassed indirectly by creditors through their family members.

A bankruptcy court can terminate the co-debtor stay if a creditor provides a valid motion for why the stay should be lifted. Without such a motion, the co-debtor is deemed effective as soon as the filing begins and remains in effect until the case is closed. It should be noted that co-debtor stays are only applicable to Chapter 13 bankruptcies, not Chapter 7 or Chapter 11 bankruptcies. Co-debtor stays are not applicable to non-dischargeable debts such as taxes or student loans.

Thinking about moving forward with bankruptcy? Contact a Houston bankruptcy lawyer from our office to explore your options. Our Houston bankruptcy attorneys can give you advice and help you move toward financial relief.