Mom's on hook for daughter's card debt

Bankruptcy doesn't absolve co-signer from card debt

Opening Credits columnist Eric 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 for the expert

Dear Opening Credits,
Twenty-two years ago, my mother co-signed on a credit card with me. I have managed and taken care of the account. They never contacted her regarding the account. I had actually forgotten that she was on the account with me. Originally, there was a $1,000 limit on the card. It eventually went up to a $30,000 limit. I recently filed bankruptcy with a $24,000 balance on this card, and now the credit card company is harassing my mom about the account. They have not sent bills or any correspondence to her, nor have they had a correct address for her in 20 years. Is she liable for the whole $24,000?  -- Jennifer 

Answer for the expert Dear Person,
I'm a little surprised that you and your mom had forgotten about her designation as a co-signer. Sure, it was a long time ago, but had either of you pulled and read your credit reports in any of those 22 years, you would have seen the account plainly listed. A jointly held notation next to that trade line would have been immediately apparent. It should have also been glaring to your bankruptcy lawyer and come up during the proceedings.

But, let's return to what happened when your mother generously lent her good credit rating to you. Perhaps you were young and unestablished in the wide world of borrowing and repaying, yet wanted a credit card of your own. Nice parent that she was, she signed her name to the paperwork, which guaranteed to the issuer that if you ever failed to pay, she would cover the balance due.

So you charged. At first you had a low spending limit and all was swell, but when they upped it dramatically, the balance grew along with it. Eventually you got in over your head and took the matter to court, where you were legally absolved of it and other allocable debts.

Here is where the case gets problematic. Decades ago, your mom agreed to pay the account if you didn't. And now, after you absolved yourself of liability, the creditor is calling her on that promise. Not only does that make sense, it's probably perfectly within their rights. However, to make sure, I contacted bankruptcy lawyer, Jeena Cho, of the JC Law group out of San Francisco. And the verdict? Mom owes. "If she's a co-signer, unfortunately, the mother is responsible for it," says Cho. That they never sent her a letter is irrelevant.

In fact, the only way out that Cho can see is if that debt is so old that the creditor can no longer sue your mom. "The statute of limitation may have run," says Cho, "making the debt uncollectible against the mother." To find out, check the date of last payment or when the creditor charged the account off (whichever came last), as well as the statute of limitations for your state. In the event that time frame has run, there's nothing they can do to legally force her into a payment.

Assuming your mom is on the hook, though, you should do everything possible to alleviate any financial and credit damage she may suffer because of it. I know it must be highly frustrating for you, because filing for bankruptcy is a tough, unpleasant process. Most people who go through it only do so as a last resort. Now you have about $24,000 remaining that you thought was gone plus a bankruptcy on your credit reports? That's awful. Still, the correct response is for you to send mom large, steady checks. Have her pass them on to the creditor so her credit stays healthy and so they don't take her to court for nonpayment. 

See related: 5 ways to rebuild credit after bankruptcy, Co-signing your kid's credit is great, unless it endangers yours

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Updated: 01-17-2018