Many consumers are confused by the difference between being an account holder and an authorized user on a credit account. It gets more confusing when there’s a divorce involved and if you add a bankruptcy to the mix, it gets positively convoluted.
If you are an authorized user on a credit card, you are often issued a card with your name printed on the front, and you are allowed to make purchases that will be billed to the account. Your name is listed on the account at the credit card company, but only as an authorized user. This means that even though you have can buy things using the credit card, you are not privy to account information and you are not responsible for payment of the debt.
If you were an authorized user on a card prior to divorce that was in your now ex-spouse’s name, you are not legally responsible for the debt on the card. In some instances, the credit account can end up on the credit report of an authorized user. Because of this potential (but incorrect) situation, authorized users in this position fear that their credit will be negatively affected if their ex files for bankruptcy including cards that listed them as authorized users. Remember that according to the credit agreement with the credit card company, your ex agreed to let you make charges and in doing so, agreed to be responsible for the debt.
Technically speaking, in California, the community property state law means that debt incurred during a marriage is evenly shared between two spouses. Having said that, I’ve handled thousands of bankruptcy cases and I don’t see credit card companies coming after authorized users. They go after the people who signed on the account. NOTE: It COULD happen, but in most cases it doesn’t.
If the credit account is showing up on your credit report, you can request that it be removed. Creditors assume that consumers would like their accounts reported to the credit bureaus (even if they are only authorized users), but they will cease reporting the account when they receive your request.
If you have other issues concerning your ex declaring bankruptcy or if you are interested in declaring bankruptcy yourself, contact the experienced southern California bankruptcy lawyers at Westgate Law.