Parental conservators can block access to finances, credit


Opening Credits
Columnist Erica Sandberg
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

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Question Dear Opening Credits,
I'm totally blind. I have a question: My parents took me to court and got conservatorship of my finances. The judge defined me as having a physical, cognitive and emotional disability. My parents filed bankruptcy on my behalf. I didn't give them permission to do it. Will this affect my ability to apply for credit cards in the near future? I have a lot of credit card debt I have to pay. I hope to hear from you soon.-- John


Dear John,
It must be awful to lose control over your finances, and I am sorry for what you're going through. However, I will assume your mother and father love you and took the wheel because they believed it was the best decision.

When your parents gained conservatorship, they gained the authority to manage your money and credit. They were then able to view your credit reports and bank accounts to see what you owed, as well as what monies you've been receiving. Eventually, they determined that there was no way you could repay the debts you were holding, nor could you in the foreseeable future. For that reason, they pursued bankruptcy for you. Such was their right, whether you liked it or not.

I presume the bankruptcy was approved, which means the unsecured liabilities that were included, including that credit card debt you mentioned, have been discharged. Unless you owe balances for something such as a car (which is secured) or child support (which is nondischargeable), you're now in the clear.

So does a bankruptcy notation prevent you from borrowing again? No, but your parents might.

Let's begin with what credit card issuers may think. A bankruptcy will appear on your consumer credit reports for 10 years from the filing date. Anyone seeing that notation is free to make an assessment about you. Obviously the bankruptcy is an indication that you ran up some bills that you didn't repay -- hardly a glowing endorsement of your money management habits. On the other hand, your reports should indicate that you no longer have those obligations, and that's positive. Additionally, you can't declare this type of bankruptcy again for another eight years, so you'd be stuck with any debt you take on, which can be perceived as reduced lending risk.

Under normal circumstances, a person who went bankrupt can get back on his feet pretty quickly with a small-limit credit card that is secured by cash. Charge a little, repay a lot and you'll be adding great information to your report. In a couple of years, the bankruptcy will have less impact, and the good charging history will carry greater weight. 

But there is a glitch in this good news and that is that you may not be able to obtain lines of credit in your own name with autonomy.

Since your parents have conservatorship, they can thwart your efforts. Sure, you can apply on the sly, but if either of them finds out, they can contact the issuer to shut the process down. Freezing your credit is also within their power. Credit freezes prevent a lender from accessing your credit history, which is required information to grant a loan or line of credit.

Perhaps, though, you can use this time to prove you can be financially responsible. Your parents may agree to lending you a small amount of money. Pay them back on time and in full, and your personal credit rating with them may improve. Eventually, they may consent to adding you as an authorized user on one of their credit card accounts. Any positive activity will appear on their credit reports as well as yours, so if you use it right, you can make amends. If you mess up, though, they can easily revoke your user status.

Good luck!

See related:Disabled son gets sued for maxed out credit card, Parent with dementia and a $40,000 debt: Who's liable?, Secured card may be best when on a fixed income

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Published: November 25, 2015

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Updated: 10-27-2016

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