debt

Help! I'm a victim of ID theft -- by my wife

Steve BucciQuestionDear Debt Adviser,
I just checked my credit report and found my wife opened an account using my name and information. I have never used this account. I didn't apply for this credit. Now the account is delinquent. In your opinion, what is the best way to go about fixing my credit? I look forward to your advice.
-- Shocked

AnswerDear Shocked,
You have several options, none of them pretty. They all lead back to your wife and marriage.

In a nutshell, you have three practical options. One is to pay off the debt and close the account. The second is to pay off the debt, close the account and freeze your credit to prevent future surprises. (Depending on where you live, this may not work, which I'll explain below.)

The third option is to pay off the account, leave it open and put your marriage on ice.

You'll notice that all the options require that the account be paid off. If it's in your name, short of going to the police and filing charges against your wife and, possibly, the mother of your children, you will be better off paying the bill as quickly as you can manage. You'll at least avoid new interest charges, fees and additional credit damage.

If you haven't already, I believe it would be best to begin by addressing the situation with your wife. Communicating in a marriage can be difficult in the best of times. Conversations about money issues can be particularly touchy. Nevertheless, finding out why your wife opened an account in your name without your knowledge may well be the key to your long-term solution.

Let's look at the options you have once you have spoken with your wife.

Option one -- paying and closing the account -- is straightforward. I suggest that whoever pays this bill, it be paid quickly. These things don't improve with age. The sooner this unfortunate incident is behind you both, the better for your credit and your marriage. However, you and your wife need to agree on how financial matters will work between the two of you in the future.

Option two includes freezing your credit to avoid new accounts being opened in your name in the future. You simply contact the three credit bureaus and ask for a freeze. There shouldn't be a charge for the freeze, although there may be a small one to thaw a report if you want to open a new account in the future. However, this option is more complicated if you live in a community property state. In community property states, debts acquired during a marriage are considered joint regardless of which party opened the accounts or received the benefits. So a freeze won't necessarily protect you from future surprises. Reaching a mutually satisfactory agreement with your wife regarding finances becomes all the more important.

Option three is more dire. I still recommend you pay the account off as quickly as possible. But if you truly want to freeze out your wife, you'll need to find an attorney to begin divorce proceedings. This is expensive, upsetting and in my opinion, to be avoided if at all possible.

Unfortunately, fixing your credit will take some time. The damage to your credit as a result of the delinquency is done. You cannot have this otherwise legitimate negative item removed from your credit report unless you claim identity theft and go to the police.

However, if the one delinquent account is the only negative item on your report, the damage shouldn't be that bad. You can help improve your credit by bringing the account current as soon as possible. In other words, pay the delinquent amount so the account is no longer reported as a negative each month. Then continue to make payments on time and at agreed terms.

Once the account is in good standing, the more time that goes by, the more your credit will improve. In two years or less, the late payments on this account will no longer have a significant negative effect.

It is hoped that in those two years, communication in your financial relationship with your wife will have improved as well and your marriage will be the better for it.

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