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
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.