Filing for bankruptcy can bring debt relief, but for those with co-signed loans or joint accounts, it may complicate financial responsibilities. When a loan or account is shared, both parties are responsible for the debt, and bankruptcy can shift the burden in unexpected ways.
When someone co-signs a loan, they are legally bound to the same responsibilities as the primary borrower. This means that if the borrower cannot repay the debt, the lender can pursue the co-signer for payment. Bankruptcy can change the situation depending on the type filed.
In Chapter 7 bankruptcy, the primary borrower’s debts are typically discharged, meaning they no longer have to pay them. However, the co-signer remains fully responsible for the debt.
The lender can pursue the co-signer for the entire balance, and if the co-signer cannot pay, they may face collection actions, wage garnishments, or negative credit reporting.
Chapter 13 provides some protection for co-signers. During the repayment plan (usually three to five years), an automatic stay known as the “codebtor stay” may prevent creditors from pursuing the co-signer, provided the borrower keeps up with the plan payments.
This stay can be lifted if the creditor proves that the co-signer directly benefits from the debt, such as using a car financed through the loan.
Joint accounts, often opened by spouses or family members, operate similarly. Both parties are equally liable, which means bankruptcy affects each account holder.
Bankruptcy can provide significant debt relief, but it is important to consider its impact on co-signers and joint account holders. Each bankruptcy type has different effects, so it is important to review all options with a legal professional. For guidance tailored to your situation, contact O’Brien Law Firm, LLC, today.
When most people think about estate planning, they imagine retirees or wealthy individuals with extensive assets. However, estate planning is not just for older adults or those with significant wealth. For young adults, having basic estate planning documents can provide peace of mind, protect loved ones, and ensure personal wishes are honored in unexpected situations.
Estate planning is not solely about dividing up money or property. It is about making important decisions regarding your health, assets, and loved ones. Even if you are in your twenties or thirties and do not own much, you are likely to still have possessions and responsibilities that need to be addressed.
For example:
For young adults with children, having an estate plan is crucial. If something happens to you, these documents allow you to appoint a trusted guardian to care for your child. This ensures that your child’s future is in the hands you choose, not a court-appointed guardian. Estate plans can also specify how financial resources should be managed for your child’s education, healthcare, or extracurricular activities.
Once you turn 18, privacy laws prevent your parents or loved ones from accessing your medical records or making decisions on your behalf. This can create complications during emergencies. By preparing documents like a healthcare directive or a durable power of attorney, you can:
Estate planning is not just about what happens after you are gone. It is about ensuring your wishes are followed, your loved ones are cared for, and your responsibilities are handled. Young adulthood is the perfect time to take control of your future. Contact O’Brien Law Firm, LLC, today to learn how to get started on this essential process.
