I am an "Authorized User" on a Credit Card - Chap 7 Petition

[gman]

Scenario:

* I am filing Chapter 7 at the end of the month.

* I am an authorized user on my dad's credit card.

* We have verified that my social security number is NOT on the account.

* My father's name is on the account/billing. My name only appears on a card.

* I am the only person who uses the card and I pay it off monthly.

* I have not made any large purchases or cash advances on this card.

Questions:

* Do I even list this credit card as a creditor on the petition - or since it is not in my name I leave it off? Why or why not?

* Do I cease using the credit card immediately?

* The due date on the card is in the middle of the month. I am filing on the 1st of Sep. What do I do concerning my Sep payment that is due? Don't pay it at all? Pay it in full? Pay it in August before filing? Please elaborate.

[LadyInTheRed]

Do I even list this credit card as a creditor on the petition - or since it is not in my name I leave it off? Why or why not?

Leave it off. You are not legally obligated to pay the debt. It's your dad's debt. Technically, you should probably list your father as a creditor.

Do I cease using the credit card immediately?

I think so. You need to learn to live without credit cards.

ETA: since you pay it off monthly, I guess I'm not so concerned about you continuing to use it. It'll help you rebuild your credit rating. I'm not sure whether there is any legal reason you can't use it. I'd stop using it until you are discharged, just to be safe.

The due date on the card is in the middle of the month. I am filing on the 1st of Sep. What do I do concerning my Sep payment that is due? Don't pay it at all? Pay it in full? Pay it in August before filing? Please elaborate.

What's the balance? If your total payments on the card are less than $600 in the 3 months before filing, paying it in full or making the minimum payment should not be a problem. If paying it off puts you over $600 you may want to make only the minimum payment or have your dad make the payment. You can repay him after you are done with your BK, even if you do list him as a creditor and have your debt to him discharged.

Before you do anything, talk about this with your attorney and follow his advice!

[hawk25]

What's the balance? If your total payments on the card are less than $600 in the 3 months before filing, paying it in full or making the minimum payment should not be a problem. If paying it off puts you over $600 you may want to make only the minimum payment or have your dad make the payment. You can repay him after you are done with your BK, even if you do list him as a creditor and have your debt to him discharged.

Before you do anything, talk about this with your attorney and follow his advice!

Im not sure but would this be counted as insider's preference since hes giving money to a family member even though its paying his own debt?

[LadyInTheRed]

Im not sure but would this be counted as insider's preference since hes giving money to a family member even though its paying his own debt?

That's a good point which would call into question all payments on that credit card made within a year before filing.

So I went to the relevant section of the bankrutpcy code.

Section 547(c)(2) is an exception to a preference (insider or otherwise):

(c) The trustee may not avoid under this section a transfer—

[snipped (1) because it's not relevant]

(2) to the extent that such transfer was in payment of a debt incurred by the debtor in the ordinary course of business or financial affairs of the debtor and the transferee, and such transfer was—
(A) made in the ordinary course of business or financial affairs of the debtor and the transferee; or
(B) made according to ordinary business terms;

While questions could be raised by the trustee, it shouldn't be a problem in the end since the history of charges and payments are evidence that they were in the ordinary course of the OPs financial affairs. gman, ask your attorney if these payments need to be disclosed on the statement of financial affairs. If so, ask whether it would be a good idea to include the details in an attachment to avoid having to explain it to the trustee later.

[gman]

Great advice! Thanks!

[tcreegan]

on credit report?

Hi gman,

Just a thought; does the cc show on your credit report?

Since your father is the only name w/ billing/accounting, this should not be on your credit report. Not your debt, do not list, pay it if it is ordinary expenses.

But...if it does not show on your credit report, it is not helping your credit score. Post-BK, write to the card company and ask them to report it on your credit report. (assuming you keep paying it off each month on time)

Good luck with everything!

Tom in Colo

[gwblake]

I had a similar situation only I am an authorized signer on company credit cards that are personally guaranteed by another officer in the business. I listed them on my Ch 7 since if the company does not pay the card balances, read the fine print on the original agreement, they can come after any other signers on the account as well. Also, I don't know if this was your case, but any time I've added someone as a card holder on my account or have been added as a holder on someone else's account they have always asked for the person's SS# who is being added.

[gman]

Hi gman,

Just a thought; does the cc show on your credit report?

Since your father is the only name w/ billing/accounting, this should not be on your credit report. Not your debt, do not list, pay it if it is ordinary expenses.

But...if it does not show on your credit report, it is not helping your credit score. Post-BK, write to the card company and ask them to report it on your credit report. (assuming you keep paying it off each month on time)

Good luck with everything!

Tom in Colo

I just checked my credit report and this card is not showing at all there.

I am NOT going to list it. I think your point makes sense - in that the credit card debt is not legally mine in the eye's of the court.

Post BK I will likely see about getting it "reported" via the 3 credit report companies.