Wife of inmate worries about his card debt
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 husband is looking at
five years' prison time. We have a card we both use in his name. I'm a user on it.
There's a little over $7,000 on it, and that's more than I can pay with my
salary. Can the bank come after me as a user? If there are no payments while
he's in prison, will they close the card? Is there a way to tell the bank he's
in prison, and will they take that into account? If I want to go and get my own
card while he's away, will the money we owe prevent me from getting a card in
my own name?
Here's some soothing
information: As an authorized user, you are not responsible for the balance
that is on the account owner's credit card.
Here's some distressing
information: It's likely you will be negatively affected by any unpaid debt that's
on the account owner's credit card, as your husband will be pursued for debt
while he's away. And if you live in a community property state, the card issuer
or collector may hold you liable for the debt even if you are not the owner of
As a married partner,
your husband's finances are probably intertwined with yours. Again, depending
on where you live, you may or may not be legally responsible to pay for the card's
balance, but your credit rating is at serious risk because that card is
appearing on your credit reports.
Your first step toward
protecting yourself is to contact the credit card company and tell it that
you need to be removed as an authorized user. If you don't, and if you
don't make payments on the card, the account will become delinquent and that
will be noted on your file -- dropping both his and your credit scores.
In most cases, jumping
off the card as an authorized user requires no more than a phone call, but
putting it in writing is also recommended. Some credit issuers wait 24 hours
before revoking your right to charge with it, but that's usually the extent of
the delay. Once you're no longer a piggybacker, the issuer will stop reporting
the account on your credit reports.
So what will happen to
the card and its balance while your husband is incarcerated and can no longer
make payments? After about 180 days of nonpayment, the issuer will do one of
two things: sue him for the debt or sell it to a third-party collector, who
will attempt to collect. Each month the liability lingers and grows (because of
the finance fees and late penalties), your husband's credit report will worsen.
Accounts in collections
look bad, but it doesn't compare to being sued. He will probably lose the case --
and possibly by default since he might not be there for the hearing -- and a
judgment will appear on his credit reports. At that point he'll owe the
creditor far more than the $7,000, as more fees and interest will be applied.
Also, the judgment creditor will be able to collect for as long as the state
allows. That's probably longer than the five years he's in prison, meaning he
could come home to horrible credit and a judgment that can be enforced with
such actions as wage garnishment and seizure of property.
And that's how his
leaving a large debt behind has the ability to affect you. If you're still
together after he gets out, his reduced income, depleted assets and poor credit
rating can affect your future plans.
I strongly suggest that
you establish your own credit history now. If he's been responsible with the
card you're attached to up until to this point, fantastic. It has helped your
rating. Pull your reports and scores to see where you are, then apply for the
best card for which you qualify. You can pull your credit reports for free from
each of the big three credit bureaus (Equifax, Experian and TransUnion) one a
year at AnnualCreditReport.com. You can purchase your FICO score for about $20
from myFICO.com. Once you have a new account, use it regularly and perfectly.
Your independence and security is essential.
I wish you the best of
See related: How to prepare financially for time in prison, Going to jail? 10 tips for reducing financial damage
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: June 5, 2013
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