Does filing for Chapter 13 affect joint credit card account?

Financial challenges are understandably difficult to navigate on one's own. However, many residents of Mississippi must grapple with not only their own financial difficulties, but also those of their family members. Many couples, for instance, have joint bank accounts, jointly-owned property, and may be listed on a partner's mortgage, car title or credit card.

When someone is listed as the authorized user of someone else's credit card, the authorized user is generally not responsible for the account itself. However, an authorized user's credit report will be affected by the use of that card, no matter which individual has used it. So, if one partner goes over the credit limit or misses payments, the hit to the credit will likely show up on both individuals' credit reports. Conversely, if one partner uses the card properly, a boost to credit could be shared by both.

One issue that may come up is what happens if an authorized user declares bankruptcy. If an authorized user goes into Chapter 13, a common form of personal bankruptcy, the credit card account is unlikely to be affected. Basically, only if the person actually financially responsible for the account declares bankruptcy would the account come into question.

It is important to distinguish between the terms "authorized user" and "joint account holder." If one is a joint owner of the account, then both partners are equally responsible for managing the account and making timely, adequate payments. Regardless of whether one is a joint holder or authorized user, there are many more important issues at play when bankruptcy is considered. Often, before filing for Chapter 13, it is beneficial for both spouses or partners to discuss debt relief matters with a lawyer, so that a solid plan for moving forward together can be forged.

Source: Fox Business, "What happens if authorized user goes bankrupt," Jane McNamara, Mar. 24, 2014

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