Is daughter liable for shared card debt with Mom?
Erica Sandberg is a prominent personal finance authority and author of "Expecting Money: The Essential Financial Plan for New and Growing Families." She writes "Opening Credits," a weekly reader Q&A column about issues for people who are new to credit, for CreditCards.com.
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Dear Opening Credits,
My ex-wife put my daughter on several of her
credit cards to help her start her credit. My ex-wife has since passed away. Is
my daughter responsible for all the debt on these cards, even on ones where she
did not activate her card? -- David
The answer you're hoping for is here: Your
daughter is probably not on the hook for any money owed to the credit cards in
Because you wrote that your former
spouse "put" the child on the cards, that's a strong indication that the
accounts are not and never were in your daughter's name at all. Rather, it
sounds to me that your ex-wife made her an authorized user. If that's the case,
your daughter can relax. The issuers (or collection agencies, if the debts were
charged off and sent to collections) won't be able to come after her for
payment. Well, they can ask, but she's not required to pay.
Many credit issuers allow account
owners to give selected people legal access to use their personal credit line.
With a phone call, they can instruct the credit card company to send a card to
whomever they want. Those cardholders will then be classified as authorized
users. The plastic will bear their name and they may swipe it at will.
Information about the account will show up on all the cardholders' credit
reports, too. So if your daughter was an authorized user, and the accounts were
all kept in good standing, they would have helped her establish her own credit
More good news: Authorized users may
have an obligation to pay for what they spent, but that would be an arrangement made between
cardholder and the account owner, not the credit card company. Users don't have
to pay the issuer because they had nothing to do with the account being approved
in the first place. The owner is solely liable for the account, and if she dies
when a balance remains, the issuer can't turn to any of the authorized users
for recompense. Whatever is owed will have to come out of the owner's estate.
As you can see, if your daughter was
just one of these ascribed account guests, whether she activated the card or
not, she's free from financial responsibility. However, if the accounts are not
being paid, she ought to call the creditors to remove herself from the accounts
right away to stop any negative account information from appearing on her
On the other hand, if what really
happened was that your ex didn't add her to the cards but instead opened new
ones with your daughter as a either a co-signer or joint account holder, your
daughter will have to pay the balance due. The reason for this is that the
credit issuer looked at her credit report and income information as well as
that of her mom's, and they gave one line of credit to both of them. The
primary accountholder may have received the bills, but in the end, both are
legally responsible for making sure the charges are paid according to the terms
of the initial agreement no matter who made them or if the card was activated
If your daughter doesn't know which
designation she is, there are two simple ways she can find out. One is to
contact the creditors and ask. They should be able to tell her quickly. If she is just an authorized user, it
will also be a good time to ask to be removed from the account.
The other method is for your daughter
to pull copies of her credit reports and see if the accounts show up as
jointly held. I would recommend that she do this anyway, since an annual credit
checkup is the best way to ensure correct and healthy reports.
See related: Co-signer, joint account holder, guarantor: Know the difference, Removing an authorized user from a credit card
Erica Sandberg is a nationally renowned personal finance authority. She’s host of several financial web shows, and a frequent guest for media outlets such as Fox, Forbes, Nightly Business Report and NPR. Erica previously was affiliated with Consumer Credit Counseling Service and was KRON-TV’s on-air credit expert. Her book, "Expecting Money: The Essential Financial Plan for New and Growing Families," was published in 2008 by Kaplan Press.
Send your question to Erica.
Published: July 10, 2013