Co-signer on dependent's (low limit) credit card?

[betterlife13]

My son, who is in school, has a credit card through the bank at which my husband and I have our personal checking account, and he also has a checking account at the same bank (on which I am a signatory, for convenience, though I have never used it). He is in college, about to graduate, and uses this card for incidental expenses, and it is always paid off in full every month. The card only has a $500 limit, and a usual monthly balance of just over $100 (again, always paid in full).

We didn't realize/recall at our initial meeting with the atty that I had co-signed with my son, but I realized it this week when (out of curiousity) I pulled my annual free credit report. I listed the monthly amount on our budget that we provided to the attorney (since our son is a dependent), but did not list it as a creditor. The attorney specifically asked if we used this account in any way, which we do not. I don't want to do anything wrong, but would prefer to just keep this card off of our BK, since my son does have occasional need of it for unforeseen expenses, plus I don't want to negatively affect his credit in any way, nor cause the bank to freeze his or our accounts, even though there is no outstanding debt.

I guess I am wondering if there is any mechanism under which they would know that we are filing and could cut off his charge card or freeze either of our bank accounts even though we do not owe anything to them? It's going to be bad enough when we drop the bomb to our son that we are filing bankruptcy, giving up our house, etc., without him worrying that he has no safety net for an emergency while finishing out his education, away from home. Bank is BB&T, by the way.

Thanks in advance for any experiences/thoughts.

[justbroke]

Yes. There is a mechanism used by major creditors -- especially "bank" cards -- that notifies these creditors of a bankruptcy filing. The banks subscribe to a notification system either through the credit bureaus themselves or the Electronic Bankruptcy Noticing Center (eBNC). Almost nightly, the system reports the filing of bankruptcies throughout the country. Most of the major banks have this automated so that as soon as the system catches one of these notifications for one of the bank's customers... the bank's computers cancel accounts.

Why not ask the bank if your son can have a card on his own and have them re-issue the card directly to him?

As for the bank freezing your account, this could be problematic if you're at a credit union or Wells Fargo. (Although Wells Fargo has been penalized for freezing account and should no longer be doing such.)

So long as that card has near a $0 balance, your college-aged son should have a credit score over 700 and should be able to get a card.

[betterlife13]

This goes from horrible to even more horrible... If he does not owe anything on the card as of the date of filing, will the bank also automatically also freeze/cancel/suspend our checking accounts? If that is the case, we should definitely hold off filing our BK until we set up new checking accounts at another bank for us and for him, as well as trying to get him a new credit card. Our atty was going to file our papers day after tomorrow, following our meeting to review paperwork with him. Son is out of town at school and won't be back for 2 weeks to possibly deal with this -- don't really want to spring this "great news" on him at this point of high pressure for him -- just prior to his finals/graduation next month. We'd hoped to wait to tell him after, and now I just don't know what to do...

Stress level at a max here -- having to give up our house with very few rental homes in our area, no where to go, plus close family members with significant life threatening health issues. I would so much appreciate any thoughts/opinions as to whether we should hold off on our filing until we set up new bank accounts and get our son out of school next month (prior to this will significantly raise his stress level, at a time in his life when he doesn't need it, nor has done anything to deserve it, and is unfortunately, not a kid to cope with issues like this real well...). If it matters towards anyone having an opinion... we have always been current on everything for 20+ years, but now have one cc 60 days late, mortage payment(s) just now 30 days late, and another cc almost 30 days late.

Help/ideas/thoughts? And so appreciative for any of these...

[justbroke]

I don't think you will have any problems at BB&T unless the credit card is from BB&T. You will need to decide for yourself whether you want to take the chance on the credit card. If there is no balance on the card, it should not be a problem. I would absolutely expect that the card account will be closed if you are a joint account holder. If the balance is $0.00, the bank may not close the account, but you should always expect all your credit card accounts, on which you are a sole or joint account holder, to be closed.

I don't think the bank will be an issue, unless you have other credit accounts at the bank, including but not limited to overdraft protection, credit cards, or a line of credit.

Certainly take your time to get everything in order. Some have found it more comforting to move checking/savings and time deposit accounts to a different bank than the one where they have credit products.

[df04527]

You need to hold off in my opinion until you are set up in a new bank. It is a tough time right now but it would be much tougher if you woke up to frozen accounts with no advanced warning. Be very thankful you found this forum, where here, unlike other places, you will not be judged and there are plenty who have walked in your shoes and will share their stories and offer guidance.

Best of luck, take a deeeeep breath. It will work itself out.

[betterlife13]

Thanks so much -- a deep breath is definitely called for, and so thankful that I found this forum. Yes, son's cc and both ours and his ckg accounts are at same bank (BB&T).

Though I can't do much of anything tonight, I did go ahead and pay off the entire balance (just over $100), though not due for 2 more weeks.... Tomorrow is a new day and all that, and I'll regroup tomorrow and figure out what to do prior to our filing Thursday afternoon (if we stay on schedule).

If we could not open up a new account prior to our (planned, but now uncertain) filing on Thursday, based upon your experiences, would we have difficulty opening a bank account post bk with a small community bank? If we got a new account open tomorrow, prior to filing, would it raise a red flag in our BK case, since it would be just a day prior? I don't want to do anything to cause a problem with our case, nor do I want to wind up with a frozen checking account due to a zero balance $500 limit credit card of my son's. It may be a lesser of the two evils...

Thanks again - the replies and advice are so much appreciated!

[justbroke]

I would definitely get a new account at a different bank before filing. If you file, BB&T may be able to use something known as a "Right of Offset" for the credit cards that you do have against the balances on your accounts. This actually happened to me when I filed; it was not BB&T but another large bank. Right after they were notified of my filing, they took money from my primary checking account and paid off the line of credit. This is known as a right of offset.

Please speak with your attorney and see if it's a good idea. I believe it's a good idea to not have any money on deposit at the same bank where you are going to discharge credit accounts.

[btbeme]

Never bank where you owe money (credit card, car, mortgage, etc) when filing for Ch 7. I can guarantee that the bank will pretty much freeze your bank account, take pictures of themselves enjoying your money, post the results on Facebook, and leave your account littered with zeros.

Seriously. Change your checking/savings ASAP. Like yesterday.

[df04527]

^lolol..... So true!

[tobee43]

just one little thing we found extremely helpful; it's good to look for a small local bank as opposed to a major if you can.

the service will be far better since they compete with the large banks and appreciate you business far more. i taught my kids the same thing. when my son was in grad school in boston he chose a small little community bank, better service and usually they are not tied in with all the other messy things that dealing with the majors usually occur. it's nice to walk in and be called by your first name and it's a great way for your son to begin to take over his own financial responsibilities as well.

when we knew we were going to file bk we immediately changed banks...even before we moved out of state i had researched a little local community bank and opened the account by mail. we are still with them today and they are wonderful to deal with.

[betterlife13]

LOL at the comments - I can just see the Facebook photos of the folks at the bank smiling, etc. and we will not let that happen!!

We went to see the attorney today and we are going to hold off on our filing for a while. In the meantime, we'll go to a small local bank, open new, separate checking accounts for us and for our son (without my name on it), and will see if he can get a low limit credit card in his name only, and close out our BB&T accounts. Our filing will take place sometime after that.

Our attorney told us there was no rush and that we could wait even a couple of months to do so, particularly to buy time to stay in the house, since we are not too far behind on what we owe (last mtg. pmt made in Feb). Our 1st mtg is much lower than what the house is worth, so the first mtg might file a motion for relief from stay and step up the foreclosure if we file in next week or two, worst case scenario possibly as early as July (GA is a non-judicial foreclosure state). Bottom line is we have to think about the timing and let him know.

Another thought -- tell me if I should post this as a separate question, but I'm hopeful someone reading this will know the answer -- I noticed that on the 6 mos income that the attorney annualized that he included a one-time, discretionary bonus that I received at the end of 2012 -- this was part Christmas bonus, and part due to my employer having a great year. I previously told him this was unusual, not guaranteed, but I'm wondering if it has to be included in the 6 month calculation, since it makes my income show as a good bit more than it is, once the 6 months is annualized. I do the books for my employer, and bonuses will not be forthcoming in the foreseeable future...

Thanks in advance! You all are the best, and I really appreciate the support and advice, more than I can express!

[justbroke]

If he annualized the bonus that is included in the "look back" window, then he did it correctly for terms of the Means Test. The Means Test is what one judge called "a backward looking litmus test performed using mathematical computations of arbitrary numbers, often having little to do with a particular debtor’s actual circumstances and ability to pay a portion of debt." I love Judge Dennis D. O’Brien from the Minnesota bankruptcy court! He said it perfectly!

If you still qualify even with that bonus, there is nothing to worry about. Even if you did still ended up with disposable income pushing you towards a Chapter 13, your attorney could then argue that the bonus was one time.

[df04527]

lol....that judge did hit it right on the head! Love it.. Thanks for sharing...