Expert: Mark J. Markus- California Bankruptcy Attorney - 10/30/2008

Question
QUESTION: We filed Ch. 13 and had a personal loan that mom co signed.  We signed a protect co signer paper.  Now that bank never filed their claim for their portion of payment and that loan is behind and they are coming after my mom she has only 2 days to get the payment or they send to collections and screw up her credit.  My attorney is still looking into it but time is of the essence.  I live in GA she lives in PA neither of us have the money but I don't think its fair cuz that bank never filed their claim in time.  What can we do to save my moms credit needed asap

ANSWER: I'd have to research it, but I think as long as you are in the Chapter 13, your mom is protected by the "co-debtor stay" of section 1301 of the Bankruptcy Code.  Probably if they take any action against her she can seek damages for willful violation of the stay, but I'd have to research that.

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QUESTION: My attorney is off hours right now they do know what's going on but I am stressing over this.  The loan office is going on Friday at end of business day and putting a collection agency on this if they don't get their money and if they do that, that will hurt my mom's credit score terribly.  How will she be able to fix that if that should happen?  Or what could we do to stop that from happening?  Is there anything I can say to my attorney tomorrow that they would be able to do to stop this bank before Friday?  Thank you so much I really really appreciate anything you can do to help me out with such short time left, I think this bank should be at fault or something for not contacting us sooner or something since they were the ones that did not file their claim and now they are coming after my mom.  Thank you so much.

Answer
No, there isn't anything you can do except make the bank aware of the chapter 13 case and cite the co-debtor stay rule to them so they're on notice that if they proceed, they could be subject to sanctions.  Again, I'd have to research all this to be 100% sure.