• Joint Debtor vs Co-Debtor

As an average US citizen, it is fairly common to encounter unfamiliar terms when filing for bankruptcy. Among these are the words Joint Debtor and Co-Debtor. They may sound alike and can even be interchangeable, but in reality these two labels have completely different meanings.

What is the Difference?

The debtor is the individual filing the bankruptcy case. The term joint debtor is used when one of the two married spouses is on the bankruptcy petition. The first person listed is the debtor while the person he/she is married to is labelled as the joint debtor. Either of the two can file for the case since there is currently no governing order requiring the husband or wife to do so.

The co-debtor is the individual, business entity, or organization that shares liability on a particular debt with the debtor or joint debtor. This debt can be a car loan, mortgage, credit card balance, or any personal or business loan that the co-debtor has successfully applied and signed for prior to filing for bankruptcy.

There can also be cases when the spouse has not signed or registered as a joint debtor but is still liable for a certain loan. He/she can instead be a co-debtor.

Can a Co-debtor Have the Benefits of Bankruptcy?

One of the benefits of filing for bankruptcy is peace of mind. Once the case has been filed and your legal representative is coordinating with the court, you will be free from your collectors’ calls and follow ups. In Chapter 13 bankruptcy, co-debtors can also enjoy this benefit even if they did not file for bankruptcy.

The term Automatic Stay indicates that both the debtor and co-debtor will not be pursued by creditors. The collecting party i.e. mortgage company also cannot seize a property, foreclose a house, repossess a vehicle, file a lawsuit or any similar action during the entire bankruptcy period. It is only when the debtor fails to cooperate with the court or pay on time that the Automatic Stay will be lifted.

Co-Debtor and Joint Debtor are only among the things one needs to be more familiarized with when filing for bankruptcy. To help you get in the loop faster and for a more comprehensive legal advice, please call us here at Sherman Law Firm, P.C. and schedule a free consultation today. We currently cater to individuals, families, and businesses in the Fort Worth and Bedford, Texas area.