Elaine Pofeldt is a journalist whose articles on entrepreneurship and careers have appeared in Fortune, Working Mother, Money and many other publications. She is a former senior editor at Fortune Small Business magazine and an entrepreneur herself, as co-founder of 200kfreelancer.com, a website for independent professionals. She writes “Your Business Credit,” a weekly column about small business and credit, for CreditCards.com.
Dear Your Business Credit,
I opened a $5,000 credit line under my then business partner’s name, knowing her Social Security number, but without asking her permission. Then I maxed out that line of credit.
When she found out, she was livid and threatened to report me to police. She has since severed our business relationship and friendship. I feel awful about it, but the most important thing now is to take financial responsibility for my mistake and pay her back. But I myself am in financial dire straits. Since my income dropped, my personal card payments became delinquent.
Is there any way she can contact the creditor, tell them what happened, and either have the account shut down, debt forgiven, or at the very least transfer that debt to me so her credit score is not tarnished? Please help! I would like to regain that friendship again over time through trust and making amends any way I can besides the debt repayment. — A
I am sure you are angry with yourself about what you did. Unfortunately, this isn’t an easy situation to resolve.
Using another person’s personal data in a way that involves fraud or deception is a federal crime known as identity theft, according to the U.S. Department of Justice. Many states have identity theft laws on the books, too, which you can view on the National Conference of State Legislatures website.
Normally, what people need to do to deal with identity theft is to file a police report. They will have a hard time proving identity theft without it, according to Experian. They also need to report the fraud to the institution that authorized the credit line and to the major credit reporting bureaus.
Reporting a card that is lost or stolen will free your friend from the debt. People who do so are not responsible for more than $50 in unauthorized charges, under the Fair Credit Billing Act. The Federal Trade Commission publishes guidelines on how to report a stolen card.
As you might have guessed, these efforts could lead to your prosecution. If you want to prevent that from happening, you need to take another approach.
As an objective observer, I can’t see any incentive for a bank who is aware of what happened to transfer the balance to you. Why would it trust you to pay the debt back, knowing you just stole someone’s identity to open a line of credit — and maxed it out? If you have any credit left on your credit cards, you could try paying your former partner back with a cash advance check so that she could lower the balance on her line of credit or pay it off completely.
Otherwise, I’d suggest you figure out a way to pay back the entire amount — pronto — and share your plan with your friend. Then make sure you follow through with it immediately.
You say you are in dire financial straits. This is a time to get very creative about legal ways to make money, so you can pay her back. Can you start looking for another job this week — or even two jobs — so you can start making payments to her immediately? Is there a family member who will loan you the money so you can pay your partner the whole balance now? Do you own any possessions, such as a car you don’t drive much, that you can sell? If you pay rent, can you move in with a family member for a while, so you can pay down the debt to your former friend? The more she sees you are actively making restitution, the more likely she is to forgive you and consider options other than filing a police report.
I would strongly suggest you get some counseling from a professional. Something led you to violate the trust of someone very close to you and to break the law. Whatever the reason was, you need to get it under control — for your own benefit. You don’t want to slip into behaviors that have the potential to ruin your reputation and your relationships and get you in trouble with the law.
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