Joint Credit Cards

I was recently asked this question:

"I took over a joint credit card after my wife and I separated and only I have charged items to the card since the separation. I have now cancelled that credit card. Does this mean my ex-spouse will not be responsible for the balance on the card if I go bankrupt?"

I had to tell this person that cancelling a credit card only means that his ex-wife would not be responsible for future charges after that date, and since the card was cancelled it was unlikely there would be charges other than interest on the outstanding balance. As the card had remained in both names after the separation, the credit card company has the right to look to the ex-spouse to cover the balance if the current user of the card filed for bankruptcy. Cancelling a credit card does not cancel the outstanding debt to either party.

A request can be made to the credit card company to remove the name of a co-signor, but in this case it is unlikely they will agree at this point in time. Sometimes the credit card companies will do this if proof can be shown that only one person has charged items to the card since the card was first used.

It is better to cancel all joint credit cards upon separation and open new credit cards in just single names. That way the balance on the old card can be paid jointly or covered in the separation negotiations and the new cards will be in the individual names and the responsibility of the charging party only.

We encourage you to e-mail us your questions before you decide to go bankrupt, or call us to set up a time to meet to review your options in more detail.

Posted by Norma Yau, Trustee @ 2:38 PM

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