Filing for Bankruptcy When you are a Co-signer or Joint Account Holder

NH Bankruptcy – There are many things to take into consideration when filing for bankruptcy. Being a joint account holder on a bank or investment account or being co-signer on a debt are two important issues that need to be addressed.

Bank Accounts

A debtor is required to list all bank accounts whether held individually or jointly. Many debtors do not consider a bank account held jointly with a relative or child as their money. I often hear debtors say “well it’s not my money.”

The truth is, if the debtor’s name is on the account and has access to the funds, the account will be considered an asset of the bankruptcy estate. The worst thing a debtor can do is to remove their name from the account. Removing the debtor’s name or moving the money to another account can be considered a fraudulent transfer in an effort to hide money. The best way to protect the funds is to use the appropriate exemption.  However, if there is too much money in the account to exempt, the debtor must prove there were no withdrawals or deposits made by them in the amount they are trying to protect. If no co-mingling can be established, the funds in that account will likely not be seized.

Co-signer or Co-debtor

Another potential issue can be that the debtor has a co-signer or co-debtor on a car or other debt such as a credit card. The problem occurs when the debtor files for bankruptcy and the co-signer/co-debtor does not. The debtor is relieved from the responsibility of the debt but the co-signer/co-debtor is still on the hook.

Possible solutions to this problem could be that the debtor reaffirms (signs a contract promising to repay the debt and not discharge it) the debt or if the debtor files a Chapter 13 Bankruptcy and the repayment plan does not harm creditor by giving less than their due.
In either case, it is important to consult with an experienced attorney who can guide you on which approach to take. Please call Theresa M. Spearing at Douglas, Leonard & Garvey to assist you at 1-800-240-1988 or fill out our online contact form.

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