Joint credit card debt can accumulate when two people share responsibility for the same credit card. Both account holders agree to repay any charges made on the card.
This type of debt often occurs between spouses, business partners or family members. If one person files for bankruptcy, the responsibility for that debt may change.
How bankruptcy affects joint credit card debt
When one person files for bankruptcy, the court may discharge that person’s obligation to pay the credit card debt. However, the other joint account holder still remains responsible for the entire balance. Credit card companies can continue to collect payments from the person who did not file for bankruptcy.
Chapter 7 bankruptcy typically eliminates the filer’s responsibility for the debt. Creditors can still pursue the other account holder for repayment. In Chapter 13 bankruptcy, the filer sets up a repayment plan to pay back a portion of the debt over time. This plan can help protect the other joint account holder from immediate collection efforts.
Options for handling joint credit card debt
People with joint credit card debt should understand their options before filing for bankruptcy. One option is to include the debt in a Chapter 13 repayment plan, which can prevent immediate collection from the other account holder. Another option involves negotiating a settlement with the credit card company.
Understanding how bankruptcy affects joint credit card debt helps both parties prepare for potential financial changes. Those considering bankruptcy should review their financial situation and explore all available solutions. Knowing how different bankruptcy chapters treat joint debt allows account holders to protect their financial future.
