Full question:
Can a Bank remove a co-borrower while I am in chapter 13 on a home? I filed based on unsecure debt. I am paying the home as agreed and never was late on orignal loan documents. Is there a BK law that can stop them. They are admitting fault of not removing her while I was asking for 16 months before I filed. Court Order in the divorce to remove her and I have deed of trust.
- Category: Bankruptcy
- Date:
- State: California
Answer:
As soon as you file a bankruptcy petition, the court issues an automatic stay, which is a legal action that prevents creditors from pursuing collection activities or legal actions against you in an effort to collect debt. It generally does not prevent a bank form refinancing a loan.
Filing the petition under chapter 13 "automatically stays" (stops) most collection actions against the debtor or the debtor's property. 11 U.S.C. § 362. Filing the petition does not, however, stay certain types of actions listed under 11 U.S.C. § 362(b), and the stay may be effective only for a short time in some situations. The stay arises by operation of law and requires no judicial action. As long as the stay is in effect, creditors generally may not initiate or continue lawsuits, wage garnishments, or even make telephone calls demanding payments. The bankruptcy clerk gives notice of the bankruptcy case to all creditors whose names and addresses are provided by the debtor.
Chapter 13 also contains a special automatic stay provision that protects co-debtors. Unless the bankruptcy court authorizes otherwise, a creditor may not seek to collect a "consumer debt" from any individual who is liable along with the debtor. 11 U.S.C. § 1301(a). Consumer debts are those incurred by an individual primarily for a personal, family, or household purpose. 11 U.S.C. § 101(8).
The answer will likely be governed by contract law principles, according to the terms of the loan agreement with the bank. It is possible that you waived an objection to their actions by requesting it as part of the divorce decree. We suggest you contact a local attorney who can review all the facts and documents involved.
Please see the information at the following link for further information about the automatic stay:
http://www.law.cornell.edu/uscode/html/uscode11/usc_sec_11_00000362----000-.html
This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.
