Steps to recover from financial infidelity

Lesson learned: Never give a spouse full control over finances

By Danielle Sacks

To Her Credit

Sally Herigstad is a certified public accountant and the author of "Help! I Can't Pay My Bills: Surviving a Financial Crisis" (St. Martin's Press, 2006). She writes "To Her Credit," a weekly reader Q&A column about issues involving women, credit and debt, for CreditCards.com, and also writes regularly for MSN Money, Interest.com and Bankrate.com, and has guested on Martha Steward Radio and other programs. See her website SallyHerigstad.com for more personal finance tips and free budgeting worksheets. Ask Sally a question, or read her previous answers in the To Her Credit archive

Dear To Her Credit,
I am going through a divorce in Kansas, and my soon-to-be ex-husband handled all of the finances. I worked full time while he worked on the side cleaning. About nine months before he left, he started working full time.

He was constantly saying we were broke. I had two credit cards before we were married, to which I added him as an authorized user. During the marriage, he opened more credit card accounts that he said were in his name. Nine months before he left, he stopped paying all the bills, which I didn't know until he left. I went through box after box and cabinet after cabinet to find he had been writing checks from the credit card accounts to himself and signing my name -- almost $30,000 worth! I didn't know checks came with credit cards. He also applied for two credit cards solely in my name without telling me and added himself as an authorized user.

In 2007, he said we needed a second mortgage on our home. He handled all the paperwork, and I signed it. I don't know where the money went.

That's not all! To my surprise and fear, I discovered last week when I reviewed my credit report he also applied for a loan in my name in 2007, which I knew nothing about.

What can I do? I have over $100,000 in credit card debt and accounts I never opened or used. Help, please.  -- Sandy

Dear Sandy,
It's not uncommon for spouses to take advantage of each other when they are contemplating or in the midst of a divorce. Your ex has taken it past the usual levels of unpleasantness, however, with his premeditated, criminal actions.

You do not live in a community property state; therefore, your ex's debts are not assumed to be yours simply because you were married. Unfortunately, he made sure your name was on all of them. Here's what you will probably be liable for:

• Credit cards you had before the marriage. These were legitimately in your name and you added him as an authorized user. His purchases may have been out of line, but you were responsible for checking the charges and the balance.
• Second mortgage, destination of proceeds unknown. You signed, and the mortgage company put up the money based on your good credit and income. It's also attached to your home. These accounts were opened without your consent and should be of interest to the police.
• Credit cards opened fraudulently. He forged your signature on the applications and again on the checks? That's a crime.
• Loan from 2007. You didn't know about it and never signed your name.

The first thing you should do is close all accounts he has access to and put a freeze on your credit. I'd also recommend contacting one of the major credit bureaus (Equifax, Experian or TransUnion), so they put a fraud alert on your name. You only have to tell one agency -- it will alert the other two.

Next, contact the Federal Trade Commission and tell them your identity has been compromised. You may not think of a spouse opening accounts in your name as identity theft, but it is. Call the FTC toll-free at 877-IDTHEFT or 877-438-4338, or go to the FTC's Identity Theft website.

You should also file a report with the local police or county sheriff. This report will help you prove you are not liable for the debt.

Contact the creditor for each fraudulently opened account and tell them you did not open the account and are not responsible for it. Send a copy of the police report.

Even though you are liable for the second mortgage and the credit cards you signed up for, your husband's deceit and apparent siphoning of assets out of the marriage for months before he left should be considered in the divorce settlement. Try to get the debts that are in your name paid off with marital assets, or they may come back to haunt you. Remember, a divorce decree only binds parties to the divorce, it does not affect the rights of creditors.

The best way you can look out for yourself during this difficult time is to get qualified legal counsel and other professional help. You can't afford to not have it. Take care, and I hope you are free from the consequences of your ex's financial misdeeds soon.

See related: Put your credit report on ice with a credit freeze, 80 percent of spouses lie about spending, How to cope when spouse's secret debts come to light

Gary Foreman, "New Frugal You"

Sally Herigstad, "To Her Credit"

Cathleen McCarthy, "Cashing In"

Jane McNamara, "Let's Talk Credit"

Elaine Pofeldt, "Your Business Credit"

Erica Sandberg, "Opening Credits"

Published: December 9, 2011

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