Well, all of your assets must be listed on a bankruptcy petition and this is true under chapter 7 or under chapter 13. If you are joint on a bank account, that basically means that you and the other party on the account both have equal rights to that money. If the sum is in excess of the state exemption amounts, then a portion of that fund or account may be touchable or attachable by the trustee in order to administer it for the benefit of creditors.
Now, in a chapter 13 bankruptcy case, your property is completely protected so it wouldn’t matter if you had a joint account that had nonexempt equity. In a 13, you simply must pay back at least as much as creditors would get in a chapter 7 bankruptcy. However, in the chapter 7, if you do have nonexempt property, your attorney is probably going to advise you to make some measures before filing the bankruptcy case.
If you file a bankruptcy case with nonexempt assets, you can expect that a trustee is going to show interest in that asset. To avoid having to turn over that asset, you might be able to buy out the trustee’s interest. We typically see this in situations where there’s a home with equity or there’s a vehicle with equity or some other piece of property that a debtor wants to hang onto in exchange for his fresh start.
So the rule is if you have property jointly owned with another party, 50% of that obviously is protected away from the bankruptcy since it’s not the debtor’s property. However, the remaining 50% is the debtor’s property and subject to administration if it cannot be protected through exemptions. The best way is to speak with an attorney and make sure that your property qualifies under the bankruptcy law and that it won’t be taken by a trustee.
