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Joint Account with Bankruptcy Filer?
My sister and her husband are filing for bankruptcy. She wants to open a checking account in her name only, but she doesn't think the bank will let her open one because of the bankruptcy, so she asked me if I would be an authorized signer on the account, so that the bank will give her an account based on my excellent credit history. If I'm an authorized signer on the account, will their bankruptcy show up on my credit history? Can their creditors take the money in my accounts? Will I be responsible for this account if she bounces a check, etc.?
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 As an authorized signer you would have no ownership capacity and no liability for the account. While this is good for you, these attributes make one wonder why a bank that doesn't want your sister's account would feel your use of the account improves her financial risk?
In many cases the bank will accept the deposit risk of a person who has filed bankruptcy. Credit risk is another matter. She should request a new checking account and no overdraft protection. Your signature as an authorized signer shouldn't be necessary. If the first bank she calls refuses, call another. At worst, she could open a savings account and use that with a debit card. Once she has that for a short term, the bank may be more amenable to opening a checking account for her.
As for creditors seeking the funds, if you put your money in an account on which your sister or her husband are an owner, it could be considered an asset of theirs. That means creditors could ask that it be divided up for them, based on their priority in the debt schedules. Your sister's attorney will be providing the court with a complete schedule of assets and liabilities. Arrangements will be made for certain creditors to be repaid all or a part of what is owed. Other creditors may get nothing. The only access they'll have to these assets and payments is through the court's trustee.
Published on BankingQuestions.com 8/25/10
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