How Bankruptcy Affects Joint Accounts and Co-Signers in Tennessee

Filing for bankruptcy is a major decision that impacts not only your financial future but also the people connected to you through joint accounts or co-signed loans. In Tennessee, understanding how bankruptcy affects these relationships is critical for protecting both your assets and your loved ones.

Joint Bank Accounts

When you file for bankruptcy in Tennessee, your assets—including joint bank accounts—are reviewed by the bankruptcy trustee. Even if the account is shared with a spouse, child, or another family member, your portion of the funds may be considered part of your bankruptcy estate. While Tennessee exemptions may allow you to protect some of these funds, the trustee could claim part of the account if it exceeds protected limits. It’s essential to keep accurate records showing which funds belong to you and which belong to the co-owner.

Joint Debts

If you share responsibility for a loan or credit card account with another person, bankruptcy does not erase their obligation to repay it. For example, if you and a spouse jointly signed for a car loan, your bankruptcy may discharge your liability, but the lender can still pursue the co-signer or joint account holder for the remaining balance.

Co-Signers

Co-signers take on financial risk by agreeing to be responsible if you cannot pay. In Chapter 7 bankruptcy, co-signers can still be held liable for the entire debt. However, Chapter 13 bankruptcy offers something called a "co-debtor stay," which temporarily prevents creditors from collecting from co-signers as long as you continue making payments under your repayment plan.

Protecting Loved Ones

If you are considering bankruptcy and are concerned about joint accounts or co-signers, careful planning is key. Reviewing the details of your accounts, your debts, and potential risks to others can help minimize negative consequences.

At Kenneth C. Rannick P.C., we can provide legal assistance to the Chattanooga public. Our firm can guide you through Tennessee’s bankruptcy process and help you understand how to protect your rights while limiting the impact on those who share financial responsibilities with you.