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First off, let me tell you that one of
the most common questions I get is from people just like you that
are being coerced [or threatened] by either debt collectors or
mortgage brokers into taking responsibility for old charges or
charge-offs that aren’t your problem. They’re not your
problem because either:
- The statute of limitations on
the enforce-ability of the debt has passed. It varies from
state to state, but it’s usually 4-5 years in most states.
[Check with an attorney to find out what it is in your area.]
- It’s not your debt. Imagine
that: Getting blamed for a debt because your name is
similar...you’d be surprised how often this occurs.
- They can’t back up their
charges! "Okay [credit card company name goes here]:
You say I signed/have responsibility for the charges on this
card? No sweat...wanna enforce the debt? Send me a photocopy
of the credit application/original agreement. Can’t provide
it? Then you can’t enforce it. Buzz off!"
This section was triggered by a column that I wrote in February
‘02:
Dear Ben: I found out recently
that my name was never removed from a joint credit card and now,
11 years after my divorce, a $6,000 collection account appears on
my credit reports because my ex-husband defaulted on the card a
year ago. I’m being told that I’m responsible for the
debt...help! Where can I turn?
– C.P. in Lewisville
Dear C.P: This is one more example of what I’ve been
preaching for a long time. If divorce is inevitable, get copies of
ALL THREE of your credit bureau reports and make sure you’re
aware of all debts or potential debts (open accounts with zero
balances) before signing any divorce agreement. According to family
law expert, attorney Brian Webb:
"As a general rule, if she SIGNED the
original credit application acknowledging she’d be responsible
for the card, then she’s personally liable for the debt. If she
didn’t sign, then she’s not...no matter whose name is on the
card. But if the debt was incurred during the marriage, the
community property she received in the divorce could be
susceptible to the debt. If she didn’t sign in the first place,
she should be able to get this removed from her credit reports.
Otherwise she’s contractually bound, even though she hasn’t
had access to the card all these years. Remember: A divorce
doesn’t alter contracts with non-party third persons. She
probably has a valid claim against her ex for the amount if she
pays it, but we already know he’s probably not good for it and
not worth the attorneys fees to chase."
Here’s what you need to do: DEMAND the
original creditor provide you with a photocopy of the original
credit card agreement, since they must prove their case to make it
stick against you. The Fair Debt Collection Practices Act, The
Fair Credit Billing Act and The Fair Credit Reporting Act are the
three federal laws that you need to invoke to protect your rights,
or make life miserable for the credit card company now damaging
your credit with this potentially erroneous information.
Situation
#1: Never sign/agree to sign a divorce decree unless
and until you’ve completely surveyed the debt/contingent
liabilities exposure you have in the marriage. I
don’t give a rat’s ass what the attorneys agree upon: It
doesn’t matter what the divorce decree says. If your spouse
"agrees" to pay assorted debts or bills, or the mortgage
or a car payment, and you’re on the note and they default?
You’re screwed. NEVER sign the line until you’re released from
all debts you’re not directly in control of repaying,
post-divorce. Want
more info? Do your homework and read all of the articles about
this on the site.
Situation
#2: The debt’s not enforceable. It
doesn’t mean you can’t be sued, because in some rare cases, it
can happen...but if it does, your attorney needs to earn their
keep and file the necessary dismissal paperwork with the court, on
the grounds that it’s not an enforceable debt. If you get sued,
you’ve gotta answer the suit—even if it’s groundless—or
else you’ll lose by default. For
more information...
Situation
#3: It’s not correct! It’s in
dispute...it’s not valid!!! Then you’ve gotta challenge
it....use my Cease
& Desist Letter [which works in all 50
states since it’s federal law] and add the following verbiage as
your next-to-last paragraph:
"I’m also seeking to protect my rights
under federal law by invoking The Fair Credit Billing Act [FCBA]
and putting you on notice that this is not a valid debt, that this
is IN DISPUTE. Any attempts to either collect
this debt or report it to any credit reporting bureau without
first verifying it’s validity will be construed as a direct
violation of the FCBA."
If the SOBs ignore you, I’ll be
happy to direct you to
attorneys that would love to sue on your behalf.
Situation
#4: It’s old information and should have come off my
report by now. Here’s another earth-shaking
revelation: Some collection agencies and creditors have been known
to change the Date of Last Activity on your files. In other words:
They’re cookin’ the books! Do you know who’s reporting what?
You’d better have copies
of ALL THREE of your credit bureau reports. And
if you can prove your case that they’re changing the dates, I
know lots of attorneys that would love to take a shot at ‘em for
you. E-mail me after
you’ve done your homework and gotten your credit reports and know
where you stand. "Thinking" won’t cut it: Document
first, talk second.
Situation
#5: You’re being harassed by a debt collector! Pay
him to make him go away? You’d
better not!!! They’re like cockroaches;
kill one and there are 1,000 behind the wall. Don’t deal with
‘em in the first place...fire those third-party debt collectors.
Knowledge is power...so get
your hands on my #1 bestseller and know what
you’re doing, or risk making some dumb mistakes that could
really cost you in the long run.
Situation
#6: This old information [or negative information] on
my report is killing me! Should I hire a credit
repair company? Sure...if you want to burn what ever dough you
give ‘em!!! It’s not brain surgery...Ben’s
#5 bestseller can help you get on track and gain
control over the info being reported about you. All else fails? Ben
can direct you to a terrific source that will
play hardball with the creditors, the credit reporting
bureaus...you name ‘em.
Situation #7: You’re
buried in debt and your finances aren’t looking like they’re
going to get any better. Keep your chin up and do
what’s in your best interest. If that means flushing everyone
and starting over by taking a bankruptcy, then so be it. It’s
not the end of the world, you won’t be the first...and believe
me: Creditors—prospective creditors, that is—have heard your
story before. You might pay a higher rate on credit cards or car
loans/leases or a mortgage for the first few years...but if you do
the math and see the long-term benefit and compare what you’ll
spend vs. what you’ll save, not to mention getting your dignity
and peace/piece of mind back, then pulling the ripcord may make
the most sense. Most important? Know
what your options are; e-mail
Ben if you need a recommendation on legal
counsel. [And be sure to include your city/state of
residence!!!]
Updated: 02/02
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