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Joint Cardholder Versus Authorized User

Whenever I give a free bankruptcy consultation, I ask about assets and debt. Assets are usually easy to list; houses, cars, furniture, jewelry, etc. But when I ask what debts are in a person’s name, it’s not always an easy answer. Some people have used a spouse’s credit card for so many years that they aren’t sure if the account is jointly held, or if they are an authorized user on their spouse’s account.
There is a big difference between the two, and it’s an important one when it’s time to figure out who is liable for the debt. Both types of accounts give both users a card in their own name, so telling me that you have a card with your name on it doesn’t help. You really need to go back to the initial account application, or call the credit card company to find out which type of cardholder you are.
If you have a joint account with someone (not always a spouse), this means that you both signed the agreement and gave your social security number for your credit score to be checked. Both of you are liable for the balance on the card in this case. If one person files for bankruptcy to discharge the debt, the other is liable for the entire balance.
If you are an authorized user on an account (again, not just a spouse can fall into this category) you can use the account to charge things, but you have no responsibility to pay for it. The card was taken out in someone else’s name and they put you on as a user of the account, and got you a card in your name. In this case, they did not add you to the responsibility side of the account. If you have ever tried to call the credit card company to ask a question about the account, you would find out that they won’t even speak to you about it, because it’s not your account.
Keep in mind that some lenders will try to collect for charges you specifically made, if the primary account holder defaults. Whether or not they will be successful is another story. Also, if the account holder defaults on their account, the lender may put the bad payment history on your credit report. You should dispute this with the credit bureaus that are showing it by stating that it is not your account and should not show on your report.
Using an account as an authorized user is much less risky than opening an account with someone. You may want to think twice about whether or not to link your credit to another person’s by opening a joint account. You can vouch for your own credit and payment history, but you never know about someone else’s. If you find yourself in a situation where a joint cardholder has filed for bankruptcy, or stopped paying the debt, contact our office for a free bankruptcy consultation.
Submitted by: Kerry Hammond, Esq. Bankruptcy Attorney

Tags: application, authorized user, credit report, credit score, debt, default, joint account

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