Authorized Users, Joint Account Holders, & Bankruptcy in Queens, NY
A surprisingly difficult question to answer when it comes to bankruptcy is whether or not someone is liable for a debt. This is especially tricky when a person has an authorized user on their credit card or is the joint owner of an account.
At the Law Office of Seni Popat, our attorney can help you understand what will happen when you file bankruptcy as a joint account owner or authorized user. Liability can be exceedingly complex, but we are here to guide you through the debt-relief process and answer any questions you may have along the way. We can also advise you regarding post-bankruptcy decisions so you can maximize your likelihood of maintaining financial security for years to come.
Authorized Users and Bankruptcy
If you are an authorized user on someone else’s credit card account, you are legally permitted to use their card to make purchases. However, you are NOT liable for the debt incurred, which is why you are not obligated to make payments. In general, your credit report is separate from that of the account holder. That said, the account may show up on your report, which may help you build credit over time (even though you aren’t technically liable for the debt).
Similarly, if you decide to file bankruptcy and have added an authorized user to your account, they will not be affected by your bankruptcy, and they will not be liable for any of the debt either of you accrued. This is why it is important to only add authorized users you trust to make smart financial decisions, as they have the power to accrue unmanageable levels of debt in your name.
Joint Account Holders and Bankruptcy
Jointly owning an account with someone is much different than being or having an authorized user. With joint accounts, both holders are equally liable for the debt. As such, you will need to list any joint accounts on your bankruptcy petition.
In New York, the bankruptcy court will most likely determine that you own 50% of the funds in a joint account—even if you contributed more or less than the other owner. As such, the trustee may be able to seize up to 50% of the funds if you cannot protect it with a bankruptcy exemption.
This often comes up with married couples, as spouses typically choose to combine finances. Because both spouses will be equally liable for joint debts, they often choose to file bankruptcy jointly if they need financial relief. Fortunately, New York bankruptcy law allows joint bankruptcy filers to double their exemptions.
Use Bankruptcy to Eliminate Your Liabilities
In general, bankruptcy is centered around liability for debts. If you are liable for a debt, creditors and debt collectors may contact you, sue you, or seize any collateral that secures the debt. If bankruptcy discharges your debt, you are no longer liable for said debt.
If you have any questions about joint accounts, authorized users, or any other liability-related matters, please do not hesitate to get in touch with our firm. We are here to not only answer your questions but also develop a personalized legal strategy that can help you achieve long-lasting financial freedom.
I had the pleasure of working with Seni Popat. He is a Top Professional!- I Gie – via Google
Law Office of Seni Popat is the place to get help.- Willie Kornegay - via Google
He is very knowledgeable, professional, helpful and was readily available to guide me and advise me through the filing process.- James Potter - via Google
Seni was absolutely fantastic.- Nicole H. - via Google
Mr. Seni Popat is THE BEST bankruptcy lawyer there is.- Yasmeen Smith - via Google