What Happens to An Authorized User During Bankruptcy?

Hi, I have just finished filing individual chapter 7 bankruptcy. I was an authorized user on one of my husband’s credit cards, and I believe the firm included it in my bankruptcy…what effect will that have on him?


Michele, first off, I love the spelling with only one L. It’s my personal favorite. This question is unique because it involves laws and individual state statutes. Some states deal with this in divorce or separation proceedings, and all bankruptcy filings handle this in the fine details. Also, this can be worked out when you’re filing for individual chapter 11.

The Separation Issue

Let’s just cover all of our bases here. If you were separated or divorced, the paperwork can designate a percentage of the debt to each party. It can also designate who portions of the debt (such as certain credit cards) to one party or the other. This is common in those cases, and it’s not at all bad to work those things out. However, things can also be separated simply by the language we’re using to define who did what.

What Is An Authorized User?

An authorized user is different from a joint account holder. People tend to use the word “co signer” but what they really mean is joint account holder. That’s what all the credit agencies are calling them these days. A joint account holder is far deeper into the debt than the authorized user.

An authorized user is not responsible for the debt. They can use the card and all of that, but they are even listed as such on credit reports (because this makes a difference in how your credit is rated.) A joint account holder is just as responsible for the debt as the original account holder. That also shows up on the credit report differently. It’s nothing more than a little semantics.

Before you continue in this search, you should be doubly sure that you are actually listed as an authorized user on the account. Not only does it make a difference, but it will make this situation more or less complicated.

What Does That Mean For The Bankruptcy?

Well, it would be wise to know the laws in your state. There are such things as community property laws that, in some states, can make all accounts entered into during a marriage joint. Just like that. That, my friend, is why the bank wants to know where you live when they ask about banking services. It makes a difference.

Were I you, I’d call the Secretary of State’s office where you live and ask the question. Press until you get an answer so that you have something to go on. Then, you should probably call the credit card issuer and ask what the contract actually says on their end.

If you have an account that has been listed as joint, the bankruptcy folks would have likely caught that. So, for future, remember that they are probably going to notice all these things on the spot. Even so, it’s a good idea to check just so you know what’s going on.

What Does It Mean For Your Husband?

For your husband, it probably doesn’t mean much at all. Let’s say that nothing changed, you made all the phone calls, and you found nothing to make you think this would turn out weirdly. There’s no weird community property laws. You just were an authorized user on the card. That didn’t change anything. You can actually still be an authorized user on the card, and, because you are not responsible for the debt on the card at all, you shouldn’t worry.

Your association with the card only goes so far as using it. Plus, your bankruptcy can’t transfer through the credit card onto your husband’s credit report. The only real issue might be your responsibility for the debt if you are a joint account holder because of some sort of community property law. That would have been discharged in the bankruptcy filing as a percentage of that debt that you were supposed to take on. You would have noticed.

Let’s Say It’s A Problem For Some Strange Legal Reason We Can’t Account For

Unfortunately, there’s no J.D. after my name, so I can’t anticipate every little legal wrangling that may occur. So, let’s say that this, somehow, has an effect on your husband’s credit card. You can negotiate the terms of the contract with the card issuer. You’ll have to speak to someone in the corporate office, but you can renegotiate the terms of the contract to make yourself less than a joint account holder.

However, again, this does not make your husband accountable for a portion of the debt that you didn’t negotiate in the bankruptcy. Everything we’ve said above is just good advice if you’re having credit issues. Every single dollar of your debt would have come up in the filing, and if his card wasn’t mentioned, then you’re ok. Plus, it doesn’t show up on his credit report because he didn’t file for bankruptcy.

To Summarize

Being an authorized user on your husband’s card doesn’t make him liable for a part of your bankruptcy. However, you may want to check to see if your state has laws that made you a joint account holder. If so, you may have ended up responsible for a part of the debt on that card. Remember that the bankruptcy folks notice everything, and you would have as well if your husband’s card had been on the filing.

It does no damage to his credit, it doesn’t affect him in any way, and you shouldn’t be concerned. However, I want to thank you for giving us an opportunity to put this information out there for other folks who may have questions prior to a bankruptcy filing or other legal quarrels like a separation or divorce. When in doubt, always check your credit reports. In a bankruptcy situation we recommend monitoring your credit reports for at least six months to make sure everything ends up kosher.

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