New York's Laws on Credit Card Responsibility for Dual Persons

In New York, as in all states, when two people sign jointly for a credit card, they are in effect telling the lender that if one of them doesn't pay, the other will. If one of those co-signers is removed from the equation for some reason, the remaining co-signer owes all the debt. Credit card companies are usually agreeable to issuing cards to dual persons for this reason.

Defaults by One Co-Debtor

If you are a co-signer on a credit card, you and the other debtor might have a private arrangement between you as to how you're going to make the payments. If one of you doesn't uphold that bargain, the other is responsible for the whole payment. The company won't care about what the two of you decided. It will continue to pursue both of you for payment until one of you pays, and if it gets a judgment for the debt, it affects both of your credit reports. The company can place a lien against property owned by either one of you. Both of your individual salaries and bank accounts are vulnerable to garnishment.

Effect of Bankruptcy

If your co-debtor files for Chapter 7 bankruptcy in New York and the debt associated with your joint credit card is discharged, this only releases him from any legal obligation to pay it. The company can still pursue you for collection. If your co-debtor files for Chapter 13 bankruptcy, this will protect you from collection efforts for a short time in New York. A Chapter 13 proceeding protects co-debtors from collection efforts during the life of the plan. However, if your co-debtor pays back only 30 percent of the joint debt through his Chapter 13 repayment plan, the discharge eliminates his liability for the remaining 70 percent. After discharge, the automatic stay against collection efforts lifts, so the creditor could then come after you to pay the remaining 70 percent of the balance.

Death of a Co-Debtor

If you share a credit card with someone and she dies, her death leaves you responsible for paying the entire debt. Technically, the creditor can attempt to collect from her estate, but the estate will probably reject the claim if someone else is dually responsible for paying it. An exception might exist if you are the surviving spouse and a beneficiary of the estate. If you are not related to your co-debtor and not a beneficiary in her will, her death does not protect you from liability for the debt at all in New York.

Tips

There's a big difference between being an authorized user on an account and being a co-debtor. If you're just an authorized user, you did not actually sign for the account and you're not on the hook for paying the balance, even if you have a credit card on the account bearing your own name. If your co-debtor defaults or passes away, the company can't collect payment from you, although some may try, especially in the event that the cardholder dies. Some unscrupulous lenders will try to collect from an authorized user, misleading him into believing that he is liable for the debt, rather than go through the probate process and try to secure payment that way. Credit card debt is low priority during the probate process, and such creditors are not always paid if the estate doesn't have enough money to pay all debts and expenses.