Representation Is Everything: A Blog About Bankruptcy Law

Before you file bankruptcy, it is important to find out what types of effects it will have on you and others, simply to make sure that you are fully aware of what to expect. While it is important to understand the effects of bankruptcy on yourself, it is also important to find out how filing for bankruptcy can affect anyone who is a joint account holder of yours.

What is a joint account holder?

Before you can understand the effects bankruptcy has on joint account holders, you will need to understand what a joint account holder is. When you open a credit card account or take out a loan, you are the account holder on the account. If you have someone on the account with you, though, this person is a joint account holder.

For example, if you add your spouse to your car loan, he or she is a joint account holder. Not only are you responsible to make the monthly car payments for this loan, but your spouse would be too. The car loan would appear on your credit report and your spouse's credit report. If you make all your payments on time, it would appear as a positive payment history on both credit reports. If you miss some payments, this negative payment history would also appear on both credit reports. Both people are equally responsible for the car loan if it is a joint account.  

How does bankruptcy affect joint account holders?

If you file for bankruptcy and have debts that include joint account holders, the debts might be discharged for you, but they would not be discharged for the joint account holders unless those individuals filed bankruptcy too.

For example, suppose your dad cosigned for a car loan for you. Your dad would be considered a joint account holder in this case. If you filed for bankruptcy, the debt would be forgiven for you if it was a dischargeable debt, but the lender could pursue collections from your dad for this debt.

What can you do about this?

If your joint account holders are being harassed by debt collectors, you can allow for this to happen or you could offer to pay these debts off even though your bankruptcy case would discharge them for you.

If you have joint accounts, knowing these effects is important before you file. To find out more about the ways bankruptcy would affect you and others, talk to a Chapter 7 bankruptcy lawyer.