How can I protect my loved ones who cosigned loans?

Bankruptcy filings can be difficult if your finances are intermingled with those of others, according to Los Angeles Times Business Reporter David Lazarus.  If you have loans, inherited funds and bankruptcy concerns, you will want to  be aware of several items. Although Chapter 7 bankruptcy protection stops all debt collections, it does not stop collections on cosigners.  On the other hand, a Chapter 13 bankruptcy provides more safeguards for cosigners because a repayment plan is created to repay the debts and therefore does not automatically drop the entire debt into the lap of the cosigner.  Of course, there are loopholes with both types of filings, so it’s advisable to spend a little money for an attorney’s advice.  That being said, “It’s seldom a good idea for loved ones to cosign loans.”

Do I have to list my mother’s bank account as one of my assets since I am a signer on the account?

Yes.  It’s better to have your name removed from the account before filing for bankruptcy protection.  You can always add it on back later.

What happens with the IRA I inherited when I file for bankruptcy protection?

Funds held in inherited IRAs are not considered “retirement funds.”  Debtors are allowed to protect funds in traditional and Roth IRAs to help ensure that they will be able to meet their basic needs in retirement.  The legal limitations on traditional and Roth IRAs ensure that debtors holding such accounts not yet of retirement age don’t enjoy a cash windfall due to the exemption since they must wait until age 59½ before they can withdraw those funds without penalty. This is not true of inherited IRAs.

This blog should be used for informational purposes only. It does not create an attorney-client relationship with any reader and should not be construed as legal advice. If you need legal advice regarding Loans, Inherited Funds & Bankruptcy, or any other Bankruptcy matters, please feel free to contact Joel E. Sannes at 480.461.5307, or log on to,  or contact an attorney in your area. Udall Shumway PLC is located in Mesa, Arizona and is a full service law firm. We assist Individuals, families, businesses, schools and municipalities in Mesa and the Phoenix/East Valley.