5 steps to dispute debt caused by ID theft

If the debt is fraudulent, you don't have to pay, but you do have a mess to clean up

Speaking of Credit columnist Barry Paperno
Barry Paperno is a freelance writer and credit scoring expert with decades of consumer credit industry experience, serving as consumer affairs manager for FICO (formerly Fair Isaac Corp.) and consumer operations manager for Experian. He writes "Speaking of Credit," a weekly reader Q&A column about credit scoring and rebuilding credit, for CreditCards.com. His writings about credit scoring have appeared in The Huffington Post, MSN Money, CBS Money Watch and other consumer finance websites.

Ask a question.
Question for the CreditCards.com expert

Dear Speaking of Credit,
My mother divorced my father several years ago. He passed away last year. Last week we received a phone call out of the blue stating that she is going to be served with papers and needs to be home between certain hours to sign for them. We had no idea what it was about. I called the number given and they gave me info that she had outstanding credit card debt. I was worried this was the issue because my father had opened many accounts in her name that she did not know about. She has never knowingly opened a credit card account herself. According to the company, the account was opened on May 17, 2007, and closed in 2010.

They told me on the phone that she needed to appear in court one-and-a-half weeks from the time that I was talking to them. I told them it wasn't her debt, that my father had opened cards in her name. They tried to get me to pay money, I said no. We were never served that day. Four days later I was told that we were going to be served between certain hours. Again, no one ever came.

This is all new to me. Do I have to keep sitting at home waiting to be served? They were pretty intimidating, saying we were going to have to pay money every time someone came out to serve us. They said they had tried two other addresses. One was bogus and the other was a place she hasn't lived in three years. I think the debt is time-barred. The company was Chase. She lived in New Hampshire, which has a three-year statute of limitations. But now she lives in Massachusetts, which has a six-year statute of limitations. What do I do?   -- Rebecca

Answer for the CreditCards.com expert

Dear Rebecca,
No matter what scare tactics the collection agency tries to impose on you and your mother, she is not responsible for the fraudulent debt incurred in her name by your late father. As long as your mother follows the proper fraud procedures with Chase, you should be able to get the collection agency off of your back and clear her credit reports of any derogatory information resulting from this theft of her identity.

The first piece of advice I'm going to offer is, for now, avoid talking to any collection agency representative on the phone, making any arrangements with them or paying anything on this debt. Though your mother should not be held responsible, there will be some work to do.

How do you dispute debt caused by an ID thief?
There are five important steps to take:

1.  File a 90-day fraud alert with the three national credit bureaus: Equifax, Experian and TransUnion. Filing a fraud alert will instruct potential creditors accessing your credit report to contact your mother directly before extending any new credit in her name. It also provides a free credit report from each credit bureau, so you can review her credit picture to determine the extent of the damage and dispute any negative information reflecting fraudulent activity.

While the main function of a fraud alert is typically to stop any unauthorized activity, the fact that the person who committed the fraud is now deceased eliminates that particular concern. For you, the advantage of the fraud alert will be to officially document the situation with the credit bureaus and obtain the free credit reports, which will enable you and your mother to check for any additional fraudulent accounts and start the dispute process.

2.  Create an identity theft report at both the FTC (online) and your mother's local police department. These reports may be required by the creditor, collection agency or credit bureau to complete the fraud process and eliminate your mother's responsibility for the debt.

3.  Call the creditors' fraud departments. Advise them that these charges in your mother's name were not authorized by her. Request that they remove any derogatory information from her credit reports. In addition, ask them to instruct any collection agencies to which the debt has been assigned to immediately stop collection activities. Your mother may have to provide proof of the divorce, as well as the police identity theft report, to show that she was not married to your father at the time of the account opening and fraudulent activity.

4.  Dispute any unauthorized balances. Once you and your mother have reviewed her three credit reports, she will want to carefully follow the credit bureaus' instructions for disputing any unauthorized accounts. To prevent the chance of future abuse, she should close any open credit accounts she doesn't use.

5.  Write to the collection agency. Explain the situation and provide documentation that will help support your mother's case. Any communication with collection agencies should always be in writing and sent via certified mail with return receipt requested. Under no circumstances should you or your mother speak with a collection agency representative, either by phone or in person.

Taking these actions should have you and your mother well on your way toward putting this most unfortunate experience behind you. I wish you and your mother the best of luck!

See related: Familiar fraud: When family and friends steal your identity

Meet CreditCards.com's reader Q&A experts

Does a personal finance problem have you worried? Monday through Saturday, CreditCards.com's Q&A experts answer questions from readers. Ask a question, or click on any expert to see their previous answers.

Join the discussion
We encourage an active and insightful conversation among our users. Please help us keep our community civil and respectful. For your safety, do not disclose confidential or personal information such as bank account numbers or social security numbers. Anything you post may be disclosed, published, transmitted or reused.

If you are commenting using a Facebook account, your profile information may be displayed with your comment depending on your privacy settings. By leaving the 'Post to Facebook' box selected, your comment will be published to your Facebook profile in addition to the space below.

The editorial content on CreditCards.com is not sponsored by any bank or credit card issuer. The journalists in the editorial department are separate from the company's business operations. The comments posted below are not provided, reviewed or approved by any company mentioned in our editorial content. Additionally, any companies mentioned in the content do not assume responsibility to ensure that all posts and/or questions are answered.

Weekly newsletter
Get the latest news, advice, articles and tips delivered to your inbox. It's FREE.

Updated: 11-21-2017