How to handle military spouse’s bad debt


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Dear Debt Adviser,
My husband was killed in action a few years ago. When I called the credit card company to settle his debts, they told me not to worry about it — they would take care of it. After checking my credit report recently, I realized they charged off the credit card as “bad debt.” What can I do?
— Shannah

Dear Shannah,
I am sorry for your loss and our nation’s loss of another hero. Let’s see if we can solve this credit report issue. It appears as though there was a miscommunication between you and what I hope was an overly helpful credit card issuer. With the stress of losing a spouse, I can easily understand how that could happen. Your best option for resolving this negative entry on your credit report will depend on how the account was held.

First, I recommend you get copies of all your credit reports from the website Review your reports and determine if the account you mention is listed on all three. I suspect that the account is appearing on your credit report because you were an authorized user on your husband’s account. If the account is listed on your credit report as an authorized user, you simply need to dispute the account as “not your account” with the credit bureau that’s reporting it. You can also contact the credit card company again and request that your name be removed from the account. Both of these actions should do the trick for removing a charged-off authorized-user account from your credit reports.

On the other hand, if the account is a joint account, you would still be an owner of the account, and the creditor should have given you the opportunity to keep paying the balance. If this is the case, contact the creditor and let them know that they made a mistake. Request that the joint account be reopened and you be given the ability to continue making payments on the account. The creditor should be able to remove the charge-off notation from the account and then you would need to start making payments. Be sure to get their agreement to remove the charge-off in a confirming email or letter before you send any money.

Should the account be a joint account and you don’t have the money to pay, you have the option to let things ride for now. Due to your husband’s death, the creditor may have charged off the account out of compassion and may not attempt to collect the unpaid amount. The charged-off account would remain on your credit report for seven years from the first date of delinquency leading to the charge-off. Since this happened a few years ago, the impact on your credit score should be minimal by now, but you should be ready to explain what happened to any prospective lender or employer who may look at your credit report.

Lastly, if the account were joint, there is the possibility the credit card company could sell the unpaid debt on the joint account to a collection agency in the future. This is unlikely if it hasn’t already happened. But, if that were to happen, you could one day be contacted by a collector.

Given your circumstances, I can’t imagine any responsible creditor wouldn’t want to help you resolve the issue to your satisfaction.

Good luck!

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