Filing for bankruptcy can bring relief. But what happens when you’re not the only one responsible for the debt? In California, many people share loans and credit with a spouse, family member, or co-signer. If you file, does the other person still have to pay?
The answer depends on the type of bankruptcy and the kind of debt involved. Here’s what you should know about how joint debts are treated when only one person files.
What Is a Joint Debt?
A joint debt means that more than one person is legally responsible for paying the same obligation. Common examples include joint credit cards, car loans, and co-signed personal or student loans. Even if only one of you used the credit or made the payments, both are on the hook.
That creates complications when one borrower seeks bankruptcy protection.
The Automatic Stay Helps, But Only for the Filer
When you file for bankruptcy, something called the automatic stay takes effect. This stops creditors from collecting from you during the case. But unless you’re filing a Chapter 13 and including the right provisions, the automatic stay does not protect the other person on the joint debt.
For example, if your ex-spouse or parent co-signed a loan with you and you file for Chapter 7, the creditor can still go after them for the full amount.
Chapter 7 and Joint Debts
Chapter 7 is the most common type of bankruptcy. It eliminates many unsecured debts like credit card balances and medical bills. But it only removes your responsibility. Your co-debtor is still on the hook.
In a Chapter 7 case:
- Your personal liability is discharged.
- Your co-signer or joint account holder remains liable.
- Creditors are still allowed to collect from them.
So even if the debt is wiped off your record, the other person might suddenly face collection calls or lawsuits. This is why it’s important to plan ahead and talk openly with anyone tied to your debts.
Chapter 13 Offers More Protection
Chapter 13 bankruptcy is different. It involves a repayment plan that usually lasts three to five years. During that time, you pay back some or all of your debts through the court.
Chapter 13 includes a feature called the co-debtor stay. This temporarily protects anyone who shares a consumer debt with you, as long as:
- The debt is consumer-related and not a business loan
- You include the debt in your repayment plan
- And the creditor does not ask the court to lift the protection
If your plan pays the joint debt in full, the co-signer may avoid any consequences. However, if only part of the debt is paid, the creditor can come after them for the balance once the case ends.
What About Married Couples in California?
California is a community property state. That means debts incurred during the marriage are typically shared, even if only one spouse files for bankruptcy.
If you file without your spouse:
- Your discharge may protect both of you from creditors going after community property, such as a joint home or shared bank accounts.
- But your spouse’s separate property, like a business or inheritance, could still be at risk depending on the debt and timing.
Married couples should weigh whether to file jointly or separately. In some cases, filing together gives better protection overall.
Talk To a Bankruptcy Attorney Before You File
Bankruptcy can be a powerful tool for a fresh start, but it can also create new problems for people connected to your debt. If you’re considering bankruptcy and have joint debts, don’t go at it alone.
At Scott Mitchell Law, we help clients across California understand their rights, minimize the impact on others, and take the proper steps toward financial recovery. Whether you’re dealing with joint obligations, creditor harassment, or just want to explore your options, we’re here to help.
Contact Scott Mitchell Law today to schedule a consultation.