Expert: Regan Shinski - 2/14/2010

Question
Prior to my mother's death 6 years ago, she asked me if I wanted to be put as a secondary user on one of her credit cards and I said yes. When I call to enquire about the card on the automated system it always asks for the last four digits of the primary card holder's social security number, which is my mother's. This card had a credit limit of $12,000 as my mother had excellent credit (mine isn't bad either, but hers was better). I lost my job and made 3 late payments. AT&T Universal, the CC company, cut the credit limit in half and they also upped the interest rate from 14% to 24.99% (they did this before the new law kicked in in February), which also increased my monthly payment by double. If I cut up this card and throw it into the wind, what is a) my legal responsibility for the debt and b) how will it affect my current credit rating? I'm thinking that I have no legal liability, and I'm thinking it won't affect my credit rating, but I need to be sure. I have about $6400 of debt on it presently.
Thank you

Answer
Hi Lia:

This depends on if you are a co-signer on the credit card agreement or just an authorized user.  If you are jointly on the account or a co-signer, you have the same legal obligations as your mother and would be liable for the debt like it was your own.  This gives the credit card issuer the same collection options as if it was your card.

There is a small chance you could be in serious trouble even if you are just an authorized user and walk away from the debt.  The credit card company could pursue you and try to extend liability to you under a fraud provision.  If you are not the account holder and made charges when you know the card holder is deceased  - i.e. could not pay them back - the liability likely extends to you anyway.  This depends GREATLY on how your credit agreement with the issuer is worded AND on state laws.  If I were you, I would be concerned enough to do some thorough research and even consult an attorney to see if you are liable or may have even committed a crime.  You case is worsened if you walk away from the debt.

The credit card company may choose not to pursue it through civil proceeding or try and file a criminal complaint against you, but I disagree with your assessment that you have no legal liability.  As stated above, I think you need to look into this more carefully.

Regarding your credit rating, again it depends on if you are an authorized user or joint card holder and if it is even reporting on credit reports.  If it is reporting, the late payments, chargeoff and possible collection may be reported on your credit report just like the good payment history was in earlier times.  Obviously, any civil or fraud judgement they obtain through the courts would also have a negative impact on your credit.

Again, I wish I had a better opinion for you.  I know this was not an intentional situation you placed yourself in, but I would be worried enough to look into state laws and your credit agreement before I let the debt go.

Good luck.  If you want, please keep me advised in case others post similar questions for me.  :)

Regan