Dear Opening Credits,
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My husband is looking at five years' prison time. We have a card we both use in his name. I'm a user on it. There's a little over $7,000 on it, and that's more than I can pay with my salary. Can the bank come after me as a user? If there are no payments while he's in prison, will they close the card? Is there a way to tell the bank he's in prison, and will they take that into account? If I want to go and get my own card while he's away, will the money we owe prevent me from getting a card in my own name?
Here's some soothing information: As an authorized user, you are not responsible for the balance that is on the account owner's credit card.
Here's some distressing information: It's likely you will be negatively affected by any unpaid debt that's on the account owner's credit card, as your husband will be pursued for debt while he's away. And if you live in a community property state, the card issuer or collector may hold you liable for the debt even if you are not the owner of the account.
As a married partner, your husband's finances are probably intertwined with yours. Again, depending on where you live, you may or may not be legally responsible to pay for the card's balance, but your credit rating is at serious risk because that card is appearing on your credit reports.
Your first step toward protecting yourself is to contact the credit card company and tell it that you need to be removed as an authorized user. If you don't, and if you don't make payments on the card, the account will become delinquent and that will be noted on your file -- dropping both his and your credit scores.
In most cases, jumping off the card as an authorized user requires no more than a phone call, but putting it in writing is also recommended. Some credit issuers wait 24 hours before revoking your right to charge with it, but that's usually the extent of the delay. Once you're no longer a piggybacker, the issuer will stop reporting the account on your credit reports.
So what will happen to the card and its balance while your husband is incarcerated and can no longer make payments? After about 180 days of nonpayment, the issuer will do one of two things: sue him for the debt or sell it to a third-party collector, who will attempt to collect. Each month the liability lingers and grows (because of the finance fees and late penalties), your husband's credit report will worsen.
Accounts in collections look bad, but it doesn't compare to being sued. He will probably lose the case -- and possibly by default since he might not be there for the hearing -- and a judgment will appear on his credit reports. At that point he'll owe the creditor far more than the $7,000, as more fees and interest will be applied. Also, the judgment creditor will be able to collect for as long as the state allows. That's probably longer than the five years he's in prison, meaning he could come home to horrible credit and a judgment that can be enforced with such actions as wage garnishment and seizure of property.
And that's how his leaving a large debt behind has the ability to affect you. If you're still together after he gets out, his reduced income, depleted assets and poor credit rating can affect your future plans.
I strongly suggest that you establish your own credit history now. If he's been responsible with the card you're attached to up until to this point, fantastic. It has helped your rating. Pull your reports and scores to see where you are, then apply for the best card for which you qualify. You can pull your credit reports for free from each of the big three credit bureaus (Equifax, Experian and TransUnion) one a year at AnnualCreditReport.com. You can purchase your FICO score for about $20 from myFICO.com. Once you have a new account, use it regularly and perfectly. Your independence and security is essential.
I wish you the best of luck.