Dear Bankruptcy Adviser,
I am an authorized user on my ex-husband's credit card. He is filing bankruptcy. I made charges on the credit card before the divorce. Can the credit card company try to collect the balance from me? Why is the card on my credit report if I am not the responsible party? Can I get the card removed from my report?
You ask some good questions. It is reasonable that you don't want your ex-husband's bankruptcy to impact your credit and even more understandable that you don't want to pay his debts. While you did make some charges on the cards, he apparently authorized you to do this and agreed to be liable for those charges.
Can the creditors come after me?
I practice in California, which is a community property state. In a community property state, most property and debt acquired during the marriage is owned and owed by both spouses.
Community property states
- New Mexico
*Note: Alaska is not recognized as a community property state but allows couples to opt in to a community property relationship.
That being said, I haven't seen creditors go after the spouse unless that spouse also signed on the account -- not just as an authorized user. As I state above, you are legally liable if you live in a community property state and then incurred the debt during your marriage, but in many cases the creditor would rather just charge off the account and go after those people who own the account outright.
Now, it is important to note that the credit card company could still go after you. I usually deal with credit card, personal loan and medical debt in bankruptcy. Maybe your ex-husband defaulted on a loan with a private individual or on a Small Business Administration, or SBA, loan. It is more likely that the nonsigning spouse may be sued in these cases.
In all other states, known as common law states, I believe that the nonsigning spouse can't be sued for the debt. While I don't practice in any noncommunity property states, I believe your signature must appear on the loan application for the lender to pursue you to pay on the debt.
Why is the card showing up on my credit report?
The account appears on your credit report because it is an active line of credit in your name. While you may not be liable on the account since you did not sign the application, you have to request the credit line to be removed. Creditors assume you want to have the account reported to the credit bureaus, but they will stop reporting the account when you tell them to remove it.
Experian, one of the three major credit reporting bureaus along with Equifax and TransUnion, automatically removes any authorized user account that contains negative payment history. Equifax and TransUnion report positive and negative history until you have the account removed.
Can I get the account removed?
Yes, you can. The creditor does not have to report that account to the credit bureaus. In most cases, one spouse adds another spouse on an account as an authorized user to help improve his or her credit.
Call the company and see whether you can remove the account verbally or whether you must make the request in writing. You can still use the account even after removing it from your credit report unless you would also like to take your name off the account.
Hopefully this answer relieves some stress. As you are learning, you must always handle your credit with the greatest of care.