Co-signer or Authorized User?
A co-signer is a person who has good credit and can help someone establish their credit by co-signing on the credit card application. This need not necessarily be a credit card application, it may also be a loan on which they can co-sign. Basically what this means is that they would take responsibility for paying the debts if the person whom they co-signed the application for defaults. For example, if Jim (who has good credit) agrees to co-sign an application for Joe (who does not have good credit), and Joe defaults on the credit card balance or loan, then Jim would have to bear the responsibility of paying the debt. Even if Joe files for bankruptcy and discharges the credit card/mortgage/car loan debt, then Jim is still responsible for paying the balance.
An authorized user on the other hand does not co-sign the credit application and therefore does not assume responsibility on the debt. An authorized user can use the credit card (with approval from the credit card holder) but the burden remains on the credit card holder to pay the debt. If Jim is only an authorized user on Joe’s credit card accounts then he does not bear responsibility for paying Joe’s debts. Jim can go to town maxing out the credit card limits and still not be responsible for any of the debts. This would be Joe’s sole responsibility.
So, when you file bankruptcy please be aware of the consequences of being a co-signer. If you think you are an authorized user, you may be just that, but you would be wise to check your credit report and possibly consult a bankruptcy attorney in your jurisdiction. I had a client call me earlier vehemently arguing that he was only an authorized user, but the credit card company had filed a lawsuit and obtained judgment against him as the primary card holder had filed for bankruptcy. As sleazy as credit card companies can be, they probably would not be able to obtain judgment against you if you had as you say, only been an authorized user. A lawsuit is no small matter, it means that it’s time to take the complaint seriously.
A bankruptcy attorney would be able to prevent this situation in the first place. If you have any questions, consult a bankruptcy attorney in your jurisdiction.
