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If a borrower declares Chapter 13 bankruptcy, may a bank still receive payments from them without contact between the parties? Alternatively, could the bank receive payments from a co-signer? – IBA Compliance Connection

IBA Compliance Connection

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If a borrower declares Chapter 13 bankruptcy, may a bank still receive payments from them without contact between the parties? Alternatively, could the bank receive payments from a co-signer?

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The Bankruptcy Code prohibits you from taking any action to obtain possession of property of the estate or of property from the estate or to exercise control over property of the estate. 11 USC 362(a)(3). It would also be a risk to take payment from a codebtor, who is protected by the automatic stay. 11 USC 1301(a). We strongly suggest that you consult with bankruptcy counsel going forward.