Co-debtor Definition:

Also spelled codebtor.

A term mostly of bankruptcy law as a bankruptcy filing comes with an automatic stay which may impact upon the liability of the non-bankrupt co-debtor, especially if it is for consumer debt. Generally, however, a co-debtor is fully exposed to collection proceedings in the event of the bankruptcy of the co-debtor. Indeed, that very risk is often the whole point of the enlistment of the co-debtor in the first place.

Much case law exists to distinguish (or capture) a co-debtor from an indemnifier, a guarantor, a bond holder and an insurer.

See also co-debtor stay.

REFERENCES:

• Duhaime, Lloyd, Bankruptcy Law
• Duhaime, Lloyd, Legal Definition of Indemnity
• In re DuBose, 22 B.R. 780 (Ohio, 1982)
• In re Kirby, 151 B.R. 463 (Tennessee, 1992)