Expert: Christine Janklow - 8/28/2007

Question
Christine,
I am writing this follow up question, which relates to a question I asked you
about two months ago. Please take a minute to read that previous question
and your answer. Then at the end, I will update you with what happened and
ask you the follow up question…



Advice Credit Card

Dear Christine,
I opened an LLC with a partner 2 years ago. During that time, my partner
applied for a company credit card through the same bank, which we kept our
bank account at (Bank Of America). The credit card company or the bank
never reached out to me, nor did I agree or sign anything saying that I would
be a second guarantor on the credit card. I figured that my partner was taking
the credit card out based on his own credit. My partner did put me down to
receive a second credit card in my name, which I used maybe twice for
business mail purposes. Fast-forward two years from then, and the company
has gone down hill. Aside from not making any income, my partner started to
use the credit card for his own personal purposes. I noticed that our bank
account was overdrawn, and that he had amounted 18K worth of credit card
debt. I took it upon myself to pay the overdrawn bank account and close it. I
also called the credit card company and asked them if I have any
responsibility to the credit card. Initially the rep told me no.  Just to be sure, I
had a letter of indemnification signed by may partner to insure that he is the
sole responsibility of the debt. He does not argue this point. Here is the
problem. Now that the credit card account has been sent into collections,
they are calling me to pay for it. The collections are saying that I am listed as
a 2nd guarantor. I called the credit card company, and they too are listing me
as a second guarantor.  But neither the collections nor the credit card
company can bring up the original application, which I have requested, which
would show me as signing up as a second guarantor. The bank is telling me
that whether I signed up on that application as a second guarantor, or my
partner signed me up without me knowing, or I am not even on that form,
that I am still personally responsible for the credit card debt, since I was a
50% partner in the company. Is this true? Am I responsible for a credit card
that I never signed up for? How can I demand a copy of that initial application
to show that I never signed up for it? I do not want my credit rating to be
affected by this, as I have perfect credit, and would want to keep it that way. I
understand that the company may be responsible for that debt, and my
partner for being the primary guarantor, but if I never signed up as a second
guarantor, can I be personally responsible? The company is officially closed.
Any advice?
Sincerely,
G Green

Answer
Dear G.Green:
Thank you for your inquiry. Your situation is quite common but no less
unfortunate than an individual who has suffered fraudulent use of his credit
information. It appears that the debt may be quite old, and has likely been
sold to a collection agency for pennies on the dollar and "charged off" by the
original creditor. That said, the agency who purchased the debt received
some basic contact information from the creditor including names of
guarantors and additional card holders. Because your business has closed,
you may not be receiving written notices sent by the collection agency as
required by law. Therefore, it may have been impossible for them to get any
response from you or your partner without the need to pick up the phone. If
they did not reach him, then they will dial the next best contact which is you.
They are telling you this is your responsibility because you were an
authorized card user on the account, but mostly because they are looking to
collect some money from ANYONE who had anything to do with this account.
This is their primary motivation and how they can realize a return on their
investment. Imagine that they might have purchased old debt written off by
the creditor for $.10 on the dollar, and were able to collect 80% - 100% of the
balance owed from you, nice profit right? The agencies will tell you nearly
anything to scare you into thinking this is your responsibility. You need to
begin exploring your liability by sending them a letter (send  certified/ return
receipt) requesting that they validate the debt and show you proof of co-
signing as guarantor. You can also request that any and all communications
be done in writing. You really need to have this discussion with your former
partner and make him aware that you have no intention of being responsible
for this. He has the choice of paying or settling the debt on his own or
through a debt mediation firm. Also, I highly recommend that after your letter
goes out, DO NOT speak with the creditors if they call you until you have an
answer. They will continue to pursue you if they get a person on the phone to
discuss the matter, which also may open up a new Statue of Limitations on
the debt. As a precaution and to better understand your rights once you
possess this information, you should consult with an Attorney in your area
that specializes in the Fair Debt Collections Practices Act (FDCPA.) You may be
able to find one by visiting the website www.fair-debt-collection.com. I hope
this answer provides a path towards resolving this matter. If you found it
helpful, please take a moment to rate it so others may benefit as well.

Respectfully,
Christine Janklow


FOLLOW UP QUESTION:

Well since then some interesting things have happened, which sparked me to
seek your expertise once more. I followed the legal procedure of sending
both Bank of America and their “Collections” department a certified letter
requesting for proof that I am a second guarantor on the credit card, as well
as requesting that they only reach out to me through written correspondence.
Bank Of America received the certified letter. Since then, I received two phone
messages from Bank of America regarding this matter. I did not respond to
either of these messages, as I hadn’t received anything in writing from them.
I am not sure if it was the Collections dept or just Bank Of America, because
they both call themselves Bank Of America.

In the meantime, I reached out to the local branch of the Bank, where
supposedly the credit card was applied for. The rep there verified orally that I
AM NOT a second guarantor on the credit card. But still she could not provide
any proof of the application for me. She put in a request for it, but that still
has never come. Instead I received the rules of the credit card in the mail.  

Here is where it becomes alarming.  On July 27, Bank Of America went into
my personal and joint accounts and wiped out $13K of money, leaving me
with $8 in my checking account and $83 in my savings account. There was no
heads up or nothing. Looking back, I believe that one of those phone calls
from Bank Of America could have been a warning, but believing that they
were harassing phone calls I ignored it.

I found out that my bank accounts had been wiped out this week, as I
checked my bank statement. I have filed for a dispute with Bank Of America
on the withdraws, but have to wait 3 to 5 days to hear their response.  I was
then going through my old mail, since I was out of town. I found a letter from
Bank of America.

The letter was dated August 7, 2007 (10 days after they took money out of
my account). It seems to be the response to my initial letter. In the letter they
state, “After completing a thorough investigation, we have determined that
your dispute falls outside of the guidelines detailed in the Fair Credit Billing
Act. Additionally, our review found that all fees and finance charges were
properly assessed to this account. Based on this investigation, Bank of
America considers this matter resolved.”

It continues: “As a reminder, failure to pay your monthly minimum payment
may result in your account being referred to an attorney to enforce your
obligation under your credit card agreement, which states that Legal
proceedings may result in a judgement and can be enforced to the fullest
extent of the law. … Please send a payment of $0.00 by August 21, 2007 in
accordance with the terms and conditions of your contract… If you feel that
you have additional information that would allow us to pursue a different
course of action, we need to hear from you…”

When I read this it seems that Bank of America received my initial letter,
cleared out my personal accounts to pay for the debt, and then sent me a
letter saying I need to pay $0.00 and the matter is resolved.

Am I reading this write? Do they have the write to just go into my personal
account like that, and take me and my wife’s money? This is relating to a
credit card that they still have shown NO PROOF that I am a second guarantor
on the card. Instead, they are insisting I am responsible because I was a
partner in the LLC Corporation. Even when the Collection agencies were
calling me, they told me that I was months away from the case being reported
to a credit bureau. But here, they just make a move and wipe me out clean?

I feel cheated and robbed by the bank. I am in the process of moving all my
Bank of America accounts to another bank.  What are my rights here??? Can
they really just take money out of my account? Can the dispute lead to a
reversal of that deposit? How will my credit rating be affected by all of this? I
have a letter of indemnification signed by my partner, who still claims sole
responsibility on all of that debt. He just has no money to pay it off. Is that
worth anything?  Also, are my other separate LLC Corporation accounts in
jeopardy of being touched by the bank as well?

I am in the process of finding a lawyer in Florida to give legal advice, but am
really curious to get your expert advice as well. Thank you for reading such a
long letter. Looking forward to your response.

Sincerely,
Gil Green  

Answer
Gil:
Thank you for your follow up question. I regret that the events that have apparently transpired make it necessary. Here is basically what has occurred; You apparently had accounts with your creditor who issued the cards in question. The bank (BofA) does have the right to set off the account based on a clause that could have been found on the original "signature card."  However it must be done properly, and based on what is described here that does not appear to be the case. As you have been unable to properly verify the debt please consider, the next step as contacting the bank and speak to a manager/supervisor or regional manager (as high-up as you can get) about this, if they do not cooperate, then the only alternative is to hire legal council to handle this matter. I wish you the best and hope you resolve this matter promptly.

Respectfully,

Christine Janklow