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CBRA and the Automatic Stay

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In a Nutshell

The Consumer Bankruptcy Reform Act of 2020 provides for a co-debtor stay in all consumer bankruptcy cases.

Written by Your Upsolve Team
Updated January 21, 2021

In its current form, the automatic stay protects co-debtors from collection actions only in Chapter 13 cases. There is no corresponding provision in Chapter 7 of the Bankruptcy Code and Section 362 is silent with respect to a creditor’s ability to pursue a co-debtor while a case is pending. 

Put differently, removing Chapter 13 from the Bankruptcy Code means eliminating the co-debtor stay provided for in 11 U.S.C. § 1301. This would leave co-debtors open to creditor collections even while a bankruptcy case is pending

Person with a very long piece of paper that looks like a bill/invoice due.

The good news is that the Consumer Bankruptcy Reform Act of 2020 provides for a co-debtor stay in all consumer bankruptcy cases. As a reminder, in this context, a co-debtor is a family member or friend who - in an effort to aid their loved one - cosigned a debt for them. Under current bankruptcy law, creditors can pursue these folks immediately. Under the new provisions, they remain protected at least for a little while, giving them - and the debtor - the chance to figure out how to deal with the debt.

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