 Take care mingling money in bankruptcy
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 Dear
Bankruptcy Adviser,
If you have your name on a savings account as a second name just for the purpose of doing transactions for the account holder and the account holder is not a spouse to you, in case of filing bankruptcy will that person lose his money or is it still considered his account? Remember, he is not a spouse, trusting family member or friend.
-- Susan
 Dear
Susan,
I want to answer this question for as many people as possible.
However, I strongly recommend speaking to a lawyer before filing for bankruptcy.
Disclaimer: The banking and exemption laws that govern this
type of situation vary from state to state and there are many types of joint accounts.
The general guidelines I'm using to answer this question derive from California
probate code 5301 and are for a basic jointly held account. This
is a very important question that people face when filing bankruptcy. You are
stating that you are on an account for the purpose of paying bills for the primary
account holder. To make this easier to follow, let's say the primary account holder's
name is "Jack." If you can prove that you are involved
with Jack's account in name only, then your bankruptcy trustee won't go after
Jack's money. Almost certainly, you will need to show the trustee Jack's bank
statements. This will prove that you've never used Jack's money for your own needs,
only for his. Also, it will show that all deposits came from Jack. In other words,
any checks or cash deposited into the account must be traced back to the primary
account holder. You may need to show that you are not owed
any money for your services from this account or from the account holder. You
may also need a letter or a declaration prepared by the primary account holder
indicating you are not legally entitled to any of the account funds. If you are
owed wages, then you must disclose that in your bankruptcy petition.
Susan, if you show the trustee Jack's bank statements
and aren't owed anything by him, you (and he) should be fine. However,
if you've ever commingled your money with Jack's, that is, if you've
ever deposited your money into his account or withdrawn money from
his account for your own needs, you could be in a position similar
to a client of mine.
I have a client whose mother put over
$50,000 into her checking account. The account was in my client's name only and
we could easily trace that the mother earned the money. However, if my client
had filed bankruptcy and turned in her bank statements, the trustee would have
had serious issues. Even though we could trace the money to her mother, who is
to say that the money wasn't a gift to her daughter? Why should the trustee believe
the mother and daughter that the money was only put into the account to be held
there for her mother? Susan, I believe that your case is different,
but the general rule is that you need to anticipate what the bankruptcy trustee
will think if you are required to show every bank statement with your name on
it.
The bankruptcy trustee knows that he would not have
judicial support if he tried to bring Jack's account into your estate
as an asset so long as you have adequate proof to support your claims
that a) you didn't commingle your assets with Jack's and b) that
Jack doesn't owe you anything. Good luck!
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