Filing Bankruptcy As A Joint Account Holder
A 55-year-old debtor is considering bankruptcy while his 81-year-old mother is a joint account holder on several of his credit cards. How will filing bankruptcy impact his mother's credit history and her relationships with her creditors?
First let's take a look at how joint accounts are viewed by law and credit card companies. A join account holder has equal responsibility for paying the debts accumulated on a credit card. Also, it is very difficult to arbitrarily remove a joint account holder from a credit card and even if you were able to remove them, they would still be responsible for the credit card debt incurred while their name was on the account.
Now, let's take a look at a hypothetical bankruptcy filing in this situation. If the debtor filed Chapter 7 bankruptcy while his mother was a joint account holder on his credit cards, it is likely that the credit card companies would go after her for payment after the credit was discharged. Credit card companies have the legal right to get payment from both or either of the joint account holders. The son's bankruptcy filing will not protect his mother from the collections actions of the credit card lender.
If the debtor filed Chapter 13 bankruptcy , the credit card companies would not be able to pursue the joint account holder until after the conclusion of the bankruptcy case. Chapter 13 bankruptcy can last anywhere from 3 to 5 years. At the conclusion of the Chapter 13 bankruptcy, the debtor would have either paid off some or all of their debts with the balance of unsecured debts being discharged. Any credit card debt that is discharged in this debtor's Chapter 13 bankruptcy will then become the financial responsibility of his mother if she was a joint account holder on that account.