How Bankruptcy Affects Joint Accounts and Co-Signers in Florida

Filing for bankruptcy in Florida can provide relief from overwhelming debt, but it also brings important consequences for joint accounts and co-signers. If you share a bank account or have loans with another person, understanding how bankruptcy affects those arrangements is critical. At Bankruptcy Lawyers Miami, we provide legal assistance to the Miami-Dade County public and guide individuals through these financial challenges.

Joint Bank Accounts in Bankruptcy

In Florida, joint bank accounts are not immune from the effects of bankruptcy. When one account holder files, their share of the funds in the account becomes part of the bankruptcy estate. While the other account holder may still access their portion, the bankruptcy trustee may freeze or investigate the account to determine ownership. This can temporarily disrupt access to funds.

Florida law recognizes a concept known as “tenancy by the entirety” for married couples. If the joint account is set up under this protection, it may be shielded from creditors seeking repayment for just one spouse’s debt. However, this protection is not automatic and must be properly established.

Impact on Co-Signers

When you file bankruptcy, your personal obligation to pay certain debts may be discharged, but co-signers remain responsible. For example, if a parent co-signed a car loan or student loan, that parent may still be pursued for payment even if you are relieved of liability.

The effect depends on the type of bankruptcy filed:

• Chapter 7 Bankruptcy – Your obligation is discharged, but creditors can immediately pursue the co-signer for payment.
• Chapter 13 Bankruptcy – An automatic “co-debtor stay” may temporarily protect co-signers during your repayment plan. However, this protection ends if the case is dismissed or once the plan is completed.

Protecting Your Relationships and Assets

Because bankruptcy can strain financial relationships, it’s important to plan carefully. Reviewing how accounts are titled, understanding your spouse’s or co-signer’s exposure, and structuring a repayment plan can help reduce negative impacts.

Conclusion

Bankruptcy in Florida affects not only the filer but also joint account holders and co-signers. Taking the time to understand these consequences can prevent financial surprises and protect your loved ones. At Bankruptcy Lawyers Miami, we can provide legal assistance to the Miami-Dade County public and guide you through each step of the process.