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Dad's bankruptcy may force daughter to pay joint card debt

When one joint account holder slips up, the other often pays the price

By Kim McGrigg

Credit Care
'Credit Care' columnist Kim McGrigg
Kim McGrigg is Community Manager for Money Management International, where she provides personal finance education information to consumers.

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Question for the CreditCards.com expert

Dear Credit Care,
My daughter and husband are jointly on a credit card. Most purchases are his, and he has since filed bankruptcy due to a stroke. Does this obligate our daughter, financially, to his charges? Suit has been filed against her for repayment. Is this possible? Can she dispute the charges? -- Georgette

Answer for the CreditCards.com expert

Dear Georgette,
Your daughter can be held liable for the charges on the credit card account if she is a joint owner of the account along with your husband. As a joint account holder, your daughter signed the cardholder agreement as a financially responsible party. With a joint credit card account, it does not matter who makes purchases on the account, both parties are financially responsible for paying the balance.

The credit card issuer is going to do whatever is necessary to collect the money due on the account and that includes attempting to collect from the other, financially responsible, account owner. I recommend that your daughter contact an attorney to determine her best options for moving forward and to appear with her in court or to file the requested papers with the court.

If your husband filed a Chapter 13 bankruptcy and included the joint credit card account with your daughter, then she may be protected from collection proceedings by the bankruptcy filing. Your daughter's attorney will know what to communicate to the card issuer if this is the case.

However, because the card issuer has filed a suit against your daughter, it is likely your husband filed Chapter 7 bankruptcy, which would not affect the creditor's ability to collect from your daughter. If that is the case, she will need to decide how she will pay what is owed. Her options may be limited if the creditor is granted a judgment through the courts. The creditor may be able to garnish her wages or her bank account(s) with the judgment depending on her state of residence. Some states do not allow wage garnishment.  

To give your daughter additional options for repayment, if it's not already too late, her attorney could communicate with the creditor and attempt to work out a repayment plan before the court date. Your daughter will need to know what she can realistically afford to pay each month or in a lump-sum payment and then the attorney can negotiate with the creditor on her behalf.

Should your daughter be unable to pay the credit card account, she also has the option to file for bankruptcy. I would encourage her to pursue all other options before filing, but if she can't pay, then filing bankruptcy may be her best choice for putting the debt behind her and moving on with her financial life. The bankruptcy would stay on her credit report for 10 years, but she can rebuild her credit during that time and be well on her way to a better credit history by the time it is removed from her credit.

Handle your credit with care!

See related: Wage garnishment: how it works, how to avoid it, 5 ways to rebuild credit after bankruptcy

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Published: December 5, 2011


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Updated: 12-10-2016


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