What Happens to My Joint Debts in Bankruptcy
If I Declare Bankruptcy, What Happens to My Joint Debts?
Bankruptcy should be the last resort to debt problems. In recent past, more and more people have chosen bankruptcy as the solution for critical debt issues. However, declaring bankruptcy will not secure the liability share of your joint partner on joint debts. This means that if you declare bankruptcy, your joint partner will be passed on with 100% liability for joint debts. Unfortunately there is no workaround for this scenario.
If you were to declare bankruptcy, you would not be allowed to leave out certain debts of your choice and continue paying them. e.g. all debts including joint debts, will have to be declared regardless of the nature of the debt.
People who live in rented houses are more likely to resolve a severe debt problem with bankruptcy. With a bankruptcy declaration, all of their debts will be withdrawn and there will be no more collection attempts from creditors. They will also be discharged and relieved from all restrictions of bankruptcy in 12 months time. Although it sounds so simple, it can be very procedural, lengthy and hectic. It can also lead their joint partners on joint debts into further burden or even bankruptcy itself, depending on the amount of the joint debt.
It is the initial agreement of joint debts that come into play when one person is declaring bankruptcy. Joint debt agreements state that when one person is unable to pay, regardless of the reason, the other party holds the sole responsibility for the full outstanding debt amount. As such, the reason to declare bankruptcy holds no particular value when it comes to joint debts.
There are certain debts that seem to operate just like joint debts, but in reality they are not. A credit card with a second cardholder name is one such debt account. Although the second cardholder is given every facility, just like in joint debts, they hold no responsibility whatsoever towards the debt.
One has to think carefully of the consequences of declaring bankruptcy and the adverse affects it could cause to his/her partner of joint debts; especially if the amounts involved in joint debts are considerably large. More often a bankruptcy declaration from one of the joint parties leaves the remaining joint partner resorting to debt management plans, individual voluntary arrangements or even declaring bankruptcy itself.
Here's the answer to your question, "If I declare bankruptcy, what happens to my joint debts?" Well, first and foremost you will be relieved of liability towards the debt. Secondly, a devastating transfer of liability towards your joint partner is inevitable; which means that your partner in joint debts will have to be liable for 100% of the outstanding debt amounts, including your share of the debt.
Now that you have the answer to your question, "If I declare bankruptcy, what happens to my joint debts?", you know that it is best that prior to taking any action, you plan how the other joint account holder will cope with the situation.If you are planning on filing bankruptcy and want to know how joint debts are handled, then you need to read more. Consult a lawyer or read on the internet for more information to see how joint debt works.
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