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Authorized user penalized for mom's bankruptcy

Dr. Don TaylorDear Dr. Don,
I recently filed bankruptcy, which was granted in April 2005. My daughter Sarah was listed as an authorized user on the four credit cards included in the bankruptcy. All but one credit card company has removed the credit card debt from her credit report. The fourth credit card company refuses to do so, claiming she was a joint applicant. Several times I requested a copy of the application proving her liability -- as did she.

She wrote letters requesting a copy of the application, which was never received by either of us. The company made promises it would be sent immediately. A second dispute was filed with the credit reporting bureaus. Sarah was an authorized user on this account. The company disagrees but has no signed application by my daughter. The account was opened in 1996 when she just turned 18. She made no purchases on the card. It was to be used for emergencies only. How can I get this off my daughter's credit report?
-- Sally Stressed

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Dear Sally,
If the authorized user is a spouse, the credit bureaus are legally obligated to report the credit history on both spouses' credit reports. No obligation exists for authorized users that aren't married, but creditors and credit bureaus can choose to report that information on the authorized user's credit report. That's normally a benefit when the authorized user is trying to build a credit history, but it can become a detriment if the account holder has credit problems -- such as your bankruptcy. The Bankrate feature, "Dangers of being an authorized user" has more about the credit risks of being an authorized user on an account.

Removing your daughter as an authorized user from these accounts prior to your filing for bankruptcy would have avoided this problem. I know that this piece of hindsight doesn't help your family in this situation, but it could help others that are contemplating filing for bankruptcy.

Write a letter to the credit card company requesting that your daughter be removed as an authorized user on this account. If they agree to take this step, the account should drop off her credit report.

Write another letter to the credit card company requesting a copy of your credit agreement that shows your daughter to be a co-applicant, mention how many times you have requested this information and send copies of this letter to your state banking commissioner and to the Federal Trade Commission. Then send one to the Federal Reserve Board for good measure.

If the credit card company is a national bank, you can contact the Office of the Comptroller of the Currency using its Consumer Complaints and Assistance service. Let me know how things turn out.

-- Posted: April 29, 2005




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