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Dr. Don Taylor, CFA, advice columnistProtecting the mentally challenged

Dear Dr. Don,
My mentally challenged foster brother works and has been able to get credit cards. In the past, things got so bad that he declared bankruptcy and with that we thought his problems were over.

We recently found out that he was issued another credit card and now owes $2,000, which is a lot considering he works part-time as a dishwasher.

Is there a way that the agency that works with him on life skills and money management can have something added to his credit report so no new credit can be issued unless they approve it? They are now working to set up a repayment schedule for a loan he can't afford and that no lender in their right mind should have ever made.
-- Susan Stressor

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Dear Susan,
In large part the ability to set up some defenses against your mentally challenged foster brother applying for, and receiving, credit depends on his standing in managing his own financial affairs.

That's because many of the protections have legal requirements that the only person that can request the action is the named individual on the credit report.

I asked Rod Griffin, the senior manager of public education at Experian, to provide a little more background about this issue. Here's what he had to say:

"Unfortunately, if the individual is independent, there is little that can be done legally. Even opting them out without their knowledge would require using their identifying information without their knowledge, and so could be construed as fraud, presenting serious implications if the individual were to pursue the matter through the legal system.

"The bottom line is that the credit reporting companies cannot prevent someone from having access to their own credit report. The credit reporting companies certainly can't prevent a person from having access to their credit history simply because someone else asks them to do so.

"However, if the person is subject to a legal guardian or conservatorship, there is some recourse. The legal guardian or conservator can request that a statement be added to the impaired individual's credit history requesting that the guardian or conservator be contacted before granting credit to the individual because of their mental condition.

"The FACT Act requirements for businesses to respond to fraud alerts on credit reports have significantly strengthened the effectiveness of such statements."

If there is a guardian or conservator that can act on your foster brother's behalf in financial matters then the following options may open up. I say "may" because it's really up to guardians or conservators to know the limitations of how they may act in place of their wards.

Putting a freeze on his credit reports is a good first line of defense against your foster brother getting additional credit cards. The Bankrate feature, "Does your state allow credit freezes?," shows that there are some states, such as Pennsylvania, that allow consumers to freeze their credit reports without first being the victims of identity theft.

The freeze would block the opening of new credit accounts where a credit check is required for approval. I'm making the presumption that your foster brother would face a pretty high hurdle in unfreezing the reports on his own.

Closing the existing account to new charges will stop him from running up the balance on the card. The outstanding balance doesn't go away, and any late fees and over-the-limit fees could move that balance higher. A debt management plan through a credit counseling agency can potentially lower the interest rate on the debt and finesse these fees. The FTC Facts for Consumers guide, "For People on Debt Management Plans: A Must-Do List," is a great quick review of the topic for you to understand what it can and can't do for him.

Opting out of receiving credit card offers will virtually stop him from getting new credit card offers in the mail. Why only virtually? The opt out only stops firms that use credit reports to prescreen recipients. The number to call to opt out is (888) 5-OPT-OUT.

To ask a question of Dr. Don, go to the "Ask the Experts" page, and select one of these topics: "Financing a home," "Saving & investing" or "money."'s corrections policy-- Posted: April 12, 2007
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