Last reviewed: 7 October 2026
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Co-signers and bankruptcy: what the Bankruptcy Code says about the other person on the debt
When a borrower files for bankruptcy, the co-signer is a different person with a different legal position. Section 524(e) of the Bankruptcy Code says discharge of a debt of the debtor does not affect the liability of any other entity on that debt, with one exception for certain community-property claims.[1] Chapter 13 adds a separate co-debtor stay for consumer debts, with exceptions.[2] This page explains both rules and does not say what any co-signer should do.
The short version
- A discharge protects the person who filed. Section 524(e) says discharge of a debt of the debtor does not affect the liability of any other entity on, or the property of any other entity for, that debt. The exception is section 524(a)(3), which concerns certain community claims.[1]
- Chapter 13 has a co-debtor stay. After the order for relief under Chapter 13, a creditor generally may not act, or start or continue a civil action, to collect a consumer debt of the debtor from an individual who is liable on the debt with the debtor or who secured it.[2] The U.S. Courts say this may protect co-signers.[3]
- That stay is limited. It ends if the case is closed, dismissed or converted to Chapter 7 or 11, it does not cover a person who became liable in the ordinary course of that person’s business, and a creditor can ask the court for relief from it on listed grounds.[2]
Chapter 7: the discharge does not release the co-signer
The U.S. Courts say a discharge releases individual debtors from personal liability for most debts and prevents the creditors owed those debts from taking collection actions against the debtor.[4] The statute is framed around the debtor. Section 524(a)(2) says a discharge operates as an injunction against starting or continuing an action, or an act, to collect, recover or offset a discharged debt “as a personal liability of the debtor.”[1]
Section 524(e) then says that, except as provided in subsection (a)(3), discharge of a debt of the debtor does not affect the liability of any other entity on, or the property of any other entity for, that debt.[1] Subsection (a)(3) is an injunction against collecting from certain after-acquired community property on account of an allowable community claim, in a case concerning the debtor’s spouse, with listed exceptions.[1] This page does not work through community-property rules, which differ by state.
The automatic stay is also framed around the debtor and the estate. Section 362(a)(1), for example, stays actions against the debtor.[5] See the automatic stay, explained. The co-debtor stay discussed below is a separate provision in Chapter 13.
Chapter 13: the co-debtor stay
Section 1301(a) applies after the order for relief under Chapter 13. It says that, except as provided in subsections (b) and (c), a creditor may not act, or start or continue any civil action, to collect all or part of a consumer debt of the debtor from any individual who is liable on the debt with the debtor, or who secured it. The U.S. Courts say that, unless the bankruptcy court authorizes otherwise, this stops a creditor from seeking to collect a “consumer debt” from any individual liable along with the debtor, and they describe consumer debts as those incurred by an individual primarily for a personal, family or household purpose.[2][3]
| Provision | What it says |
|---|---|
| Section 1301(a)(1) | The stay does not apply if the individual became liable on or secured the debt in the ordinary course of that individual’s business.[2] |
| Section 1301(a)(2) | The stay ends when the case is closed, dismissed, or converted to a case under Chapter 7 or 11.[2] |
| Section 1301(b) | A creditor may present a negotiable instrument and may give notice of dishonor of that instrument.[2] |
| Section 1301(c) | On request of a party in interest and after notice and a hearing, the court shall grant relief from the stay as to a creditor, to the extent that (1) as between the debtor and the protected individual, that individual received the consideration for the creditor’s claim; (2) the debtor’s plan proposes not to pay the claim; or (3) the creditor’s interest would be irreparably harmed by continuing the stay.[2] |
| Section 1301(d) | Twenty days after a request under subsection (c)(2) is filed, the stay is terminated for the party making the request, unless the debtor or an individual liable on the debt with the debtor files and serves a written objection to the proposed action.[2] |
Section 1322(b)(1) lets a Chapter 13 plan treat a consumer debt on which an individual is liable with the debtor differently from other unsecured claims.[6] What a plan actually proposes to pay on a co-signed debt is a major factor in whether relief under section 1301(c)(2) is available, so a co-signer or a debtor should read the plan itself or ask an attorney.[2]
What the two chapters mean side by side
| Question | Chapter 7 | Chapter 13 |
|---|---|---|
| Does the discharge release the co-signer? | No. Section 524(e) says discharge of the debtor’s debt does not affect any other entity’s liability on it.[1] | The same section 524(e) rule applies to a discharge generally.[1] |
| Is there a stay protecting the co-signer while the case is open? | The co-debtor stay is in section 1301, which is in Chapter 13. This page does not identify a Chapter 7 equivalent.[2] | Yes for consumer debts, with the exceptions and relief grounds above.[2] |
| What ends the protection? | Not applicable. | Case closed, dismissed, or converted to Chapter 7 or 11, or the court granting relief from the stay.[2] |
Chapter 12 has its own co-debtor stay in section 1201; this page does not cover it.[7]
What the sources do not say
They do not say whether a creditor will pursue a co-signer, how a co-signer’s credit report is affected, or what any state law adds. Section 1301 applies only to consumer debts, and the U.S. Courts’ description of it is a summary. For the federal notice a co-signer must be given before becoming liable, and what that notice says, see the Credit Practices Rule and your rights as a cosigner. For joint accounts and authorized users, see authorized users, joint accounts and closing a card.
Your next step
If you co-signed a debt and the borrower has filed or is considering bankruptcy, a bankruptcy attorney can say how the sections above apply to the specific debt and chapter; see free legal help for debt problems. This is general information, not legal advice. Our Standard checks companies; it does not review any court process.
When we will update this page
We revisit it when sections 524 or 1301 change or the U.S. Courts update the cited pages. Sources last read 7 October 2026.
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