When a spouse or parent declares bankruptcy, it can have a major impact upon the entire family. If your spouse or parent declares bankruptcy, it can directly affect you. This is particularly true if you hold a supplementary credit card. If this is the case, the bankruptcy effect on credit may be felt by both parties.
What Is a Supplementary Credit Card?
A supplementary credit card is an extra card with a specific purpose. It is for a “loved one.” The recipient who is the principal credit card holder gives the extra or supplementary card to a spouse or family member. In some instances, the principal credit card owner can obtain up to 3 supplementary credit cards. It depends upon the rules of the supplier.
There is no application from the supplementary holders. There is usually no need for the supplementary holder to provide an income record. There is an age stipulation. He or she must be 18 years of age.
The credit card company or financial institution focuses on the qualifications of the principle cardholder. He or she is the person responsible for the credit card except in specific circumstances. The company considers the supplementary user. Payment agreements and restrictions for the supplementary card, if they exist, are struck between the principle and supplementary cardholders. It is up to the principle card holder to ensure the supplementary cardholder makes payments as required and arranged on time.
How Does It Affect Your Credit In Bankruptcy?
When the principle holder of the card declares bankruptcy, the supplementary cardholder immediately suffers from some of the consequences of holding such a card. A supplementary cardholder faced with a partner’s or parent’s bankruptcy debt may be liable for the credit card debt. The company can and will pursue the supplementary cardholder for repayment of the money due.
The combination of bankruptcy and holding a supplementary card will also have an impact upon your credit rating. Your score will decrease. Bankruptcy can remain on someone’s record for 10 years. Even indirectly, the stigma of the situation will influence your credit score, decreasing your chances of obtaining your own credit card.
Options
If you have a supplementary credit card, be aware of accompanying financial obligations. If your partner or parent is declaring bankruptcy, talk to a lawyer. He or she can offer suggestions such as removing you from their account prior to filing.
