JOINT DEBTS: HOW THEY ARE TREATED IN CHAPTER 7 BANKRUPTCY
If you are planning on filing for bankruptcy, it may be possible to eliminate credit card, medical or other loans. However, if another person is on the account or has co-signed a loan with you, he or she could still be pursued by creditors.
WHAT DOES THIS MEAN FOR THOSE PARTIES?
As a practical matter, you are granted an automatic stay from creditor activities when filing for Chapter 7 in Las Vegas. When the debts are discharged, there is no way for a creditor to come after you for the debt. Therefore, creditors are likely to focus their collection efforts on other account holders or co-signers. This could result in collection calls, lawsuits or other efforts by creditors to get their money from those parties.
HOW CAN YOU PROTECT JOINT ACCOUNT HOLDERS OR CO-SIGNERS?
The only way to prevent a co-signer or joint account holder from increased creditor collection activities is to reaffirm the debt. This means that you agree to keep making the payments even if other debts are discharged. It is also your right to voluntarily pay off the debt in an effort to protect friends, family members or others who may now be on the hook for your debt.
IT MAY BE POSSIBLE TO REFINANCE THE LOAN
A creditor may allow you to refinance the loan just prior to filing bankruptcy or while your case is ongoing. This may allow you to make payments to creditors while getting rid of a co-signer or otherwise putting the account in your name only.
While filing for bankruptcy may help you obtain debt relief, that may not be true for others listed on the same account. Therefore, it may be worthwhile to create a plan that protects their interests while also preserving your own rights under the law.
