How to cope with massive family credit card fraud
Dear Credit Care,
Several years ago, my husband's nephews took out several credit
cards in my husband's name and mine. Three of the four were for the same
company we had taken out a card with. I had been making payments on what I
thought were our accounts, and my husband was also making payments. It turned
out that we were paying on five different accounts. We paid off ours and two of
the fraudulent ones. Another one was written off. The final one is in my name
only.
Due to unemployment and heavy medical bills, I cannot pay the final one off.
The amount with interest has escalated to over $17,000. Can they garnish my
husband's paycheck? -- Penny
Dear Reader,
Wow, what a mess. First I want to point out for you and my readers
that you do have the option to file a police report when accounts have been
opened fraudulently in your name. I understand that you may not want to
exercise that option when family members have committed the fraud, but keep in
mind that it is an option. If the account is reported to the police as
fraudulent (you would need to report the fraud as soon as it is discovered), you
would no longer be held financially responsible for any charges on the account
and your liability would be limited to $50 per account. It may even be less than that, as many issuers have zero-liability policies when it comes to fraud.
Next, be sure that you've closed all of the accounts, including those
that you have already paid off, so that your nephews will not be able to access any of
them and add to the balances. And while we are speaking of the nephews, it would
be worth the effort to explain to them that what they did -- opening accounts
in other person's names without their permission -- is illegal. Also, attempt to
get a commitment from them to repay the principal balance plus interest and
fees for the accounts they used. A formal written repayment agreement would be ideal.
It is unlikely that you have heard the last from the account that
was written off. The original creditor may have chosen to charge off the debt
as uncollectible for accounting purposes, but that does not mean that you no
longer owe the balance of the account. It also does not mean, unfortunately, that interest
charges and fees are no longer being added to the balance each month. What it almost
certainly does mean, however, is that you have yet to hear from the collector who purchased or
was hired to collect the debt.
So, you have two accounts that are unpaid, and you will want a plan
for how you will handle them. You will need to communicate with your creditors
and explain to them your current financial situation. If you are unsure how to
proceed, you might consider contacting a nonprofit credit counseling
organization for help. Your certified counselor will perform a thorough review
of your finances and make recommendations for the best course of action for
you. Your options may include a debt management plan, where your interest rates
may be reduced and fees would end, or if no other options are workable with
your current income, you may need to consider bankruptcy. You can find a qualified, nonprofit credit
counseling agency through the National Foundation for Credit Counseling or the Association of Independent Consumer Credit Counseling Agencies.
If you receive notification from your creditor or a collector that
you are being sued in court to collect what you owe on your account(s), be sure
to follow the instructions in the letter. Either appear in court on the day
specified or submit the requested documents to the court as instructed. If you
are sued in court and the creditor wins, a judgment would be issued for the
amount you owe. Depending on which state you live in, with a judgment, the
creditor could petition the court for a garnishment order for wages or bank
accounts. Regarding the account in your name only, the creditor would only be
allowed to garnish your wages -- unemployment benefits are typically not eligible for garnishment -- or any bank account in your name. Should you and your husband
have a joint checking account, the funds in that account could be garnished.
It would be best to avoid a suit in court if possible. I recommend
that you do whatever is necessary to work out a solution before things progress
to that point.
Handle your credit with care!
See related: Your Wallet Recovery Kit, What types of funds are not eligible for garnishment?, Pros and cons of debt management plans, The scoop on debit, credit card zero-liability policies
Kim McGrigg is the community manager for Money Management International, the largest nonprofit, full-service credit counseling agency in the United States. You can find more money management advice on Blogging for Change and MMI's Facebook page.
Credit Care answers a question about a debt or credit issue from a CreditCards.com reader each week.
Send your question to Credit Care.
Published: October 17, 2011
 |
 |
 |
|
Three most recent Credit Care stories:
|
|
 |
|
 |
|
|
|
|
CreditCards.com's newsletter
Did you like this story? Then sign up for CreditCards.com’s weekly e-newsletter for the latest news, advice, articles and tips. It's FREE. Once a week you will receive the top credit card industry news in your inbox. Sign up now!
 |
|
|
|
|
|
