If A Parent Declares Bankruptcy, Will Their Children Be Responsible For Their Debts?
If a parent declares bankruptcy, will their children be responsible for their debts?
A Chapter 7 bankruptcy is considered a "no asset" case, which means the debtor has no non-exempt assets available to pay creditors. In such cases, the debtor states under oath that his or her debts are dischargeable, and then the bankruptcy court issues an order to that effect. The debt is then no longer legally collectable by creditors.
If you are the child of someone who filed a Chapter 7, there are two ways in which you might be held responsible for your parent's debts. If you cosigned a loan with your parent and they default (fail to make payments), you could be sued for the amount owed on the loan. If the creditor wins a judgment against you, it might be able to use wage garnishment or bank levies to collect from you.
Theoretically, if your parent's creditor wins a judgment against him or her, that creditor could then seize collateral from your parent or sue you for your parent's portion of a jointly owned home or business. But this doesn't happen very often.
If you have any questions or need a Chapter 7 Bankruptcy Lawyer, please call this law firm for a free consultation.
Ascent Law LLC
8833 S Redwood Road Suite C
West Jordan UT 84088
(801) 676-5506
