The Fate of Joint Credit Card Accounts Between Spouses
Understanding what happens to credit cards that are joint with a spouse can be a complex issue. In this article, we will delve into the intricacies of this subject, providing clarity and guidance for those who find themselves in this situation.
The Basics of Joint Credit Card Accounts
A joint credit card account can be a beneficial financial tool for spouses. However, understanding the ramifications of such an arrangement is crucial, particularly when it comes to financial difficulties.
Bankruptcy and Joint Credit Card Accounts
When one spouse files for bankruptcy or proposes under the Bankruptcy and Insolvency Act, the creditor might not be able to collect from them, but they can seek the due amount from the other joint debtor, in this case, the spouse.
The Difference Between Joint Card Holders and Supplementary Card Holders
The confusion often arises when the distinction between joint card holders and supplementary card holders is unclear. In some instances, a supplementary card holder may not be liable for the debt, or may only be accountable for what they themselves charged to the card, or they might be responsible for the total balance.
The Role of Credit Card Issuers
When in doubt, it is advisable to reach out to the credit card issuer. They can clarify whether a spouse is jointly responsible for the debt or merely a supplementary cardholder.
Understanding Credit Card Agreements
Credit card applications and agreements can also provide clarity on this issue, though they can sometimes be difficult to understand due to complex legal jargon.
The Proposal Route
In some situations, a proposal could be a better option than bankruptcy. This could potentially protect the joint card holder from the creditor. However, this approach has its limitations and might only work if the proposal offers the creditor a reasonable enough return as compared to pursuing the joint card holder.
Protecting The Joint Card Holder
The proposal could potentially shield the joint card holder from creditors. However, this would only work under specific conditions which are typically limited in nature.
The Concept of ‘Creditor Proof’
An individual with no assets or income may be considered “creditor proof”, meaning that the creditor might not have anything to claim. In such cases, the creditor might finally decide to write off the debt.
Writing Off The Debt
If a spouse is deemed “creditor proof”, the creditor may eventually write off the debt. This occurrence, however, depends on the circumstances and the decision of the creditor.
While every case is unique, understanding the general rules and exceptions can help one navigate through these situations.
