CBRA and the Automatic Stay
1 minute read • Upsolve is a nonprofit that helps you get out of debt with education and free debt relief tools, like our bankruptcy filing tool. Think TurboTax for bankruptcy. Get free education, customer support, and community. Featured in Forbes 4x and funded by institutions like Harvard University so we'll never ask you for a credit card. Explore our free tool
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.
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.
