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Chapter 20 codebtor stay
Under 1301(c)(2), he would have to pay 100% of the debt - if the judge
would even approve a Ch20. Why would this particular creditor be
entitled to 100% payment while the others get nothing? Trustee likely
to object to this. Makes more sense for son to work something out to
pay the creditor directly or file bankruptcy himself.
Shannon A. Doyle
Attorney at Law
100 N. Barranca Avenue, Suite 250
West Covina, CA 91791-1600
Tel: (626) 646-2555
Fax: (626) 332-8644
www.blclaw.com
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Listmates:
Debtor just finished chapter 7 and received a discharge. Debtor's son was
an authorized user on debtor's credit card which the son used for some
consumer goods and services. Debtor says his son did not sign a credit
card agreement. However, the account does appear on the son's credit
report, and the card has contacted the debtor's son.
1. Considering that Debtor has just received discharge, could the Debtor
file 13 and use 1301 codebtor stay to protect his son?
1301(a) provides that "a creditor may not act . . . to collect all or any
part of a consumer debt of the debtor from any individual that is liable on
such debt *with *the debtor, or that secured such debt." (emphasis added)
Arguably, after the Debtor's chapter 7 discharge, the son is not liable on
this debt with the debtor. The son is liable on this debt alone. Would
this prevent codebtor stay in chapter 20 context?
Supreme court ruled on a similar issue in the mortgage context in *Johnson
v. Home State Bank*, 501 U.S. 78, 87 (1991).
http://www.law.cornell.edu/supct/html/90-693.ZS.html. The supreme court
held that the post-chapter 7 discharge debtor remains "liable" on the
bank's claim because the bank retains a claim in the form of the right to
foreclose and take the property from the the post-Chapter 7 discharge
debtor. Relying on this logic, the supreme court held that the collateral
will be a part of the 13 estate even if 13 follows 7. This would imply
that because an unsecured claim disappears completely without leaving a
counterpart, with it disappears the protection of 1301 stay.
A bankruptcy court in *Harris v. Margaretten & Co. (In re Harris)*, 203
B.R. 46, 49 (EDVA 1994) followed this precise logic and held that there, in
a case involving a mortgage claim, there is post-7 1301 stay because the
debtor still stands to lose his property and the bank still stands to gain
it.
Any thoughts?
2. There is a separate issue with 1301(c)(1) which provides an exception
from (a) where "as between the debtor and the individual protected under
subsection (a) of this section, such individual received the consideration
for the claim held by such creditor;" I understand that since the son
received some benefits from this card an exception in (c)(1) may apply. How
likely is it that the credit card raises this issue?
Any thoughts?
Alik Segal
Alik.Segal@gmail.com
310-362-6157
California Central District
Listmates:Debtor just finished chapter 7 and rece
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