DEBTS FOR WHICH YOU ARE NOT LEGALLY RESPONSIBLE
Is the debt collection trying to get you to pay debts that you are not legally obligated to pay, such as:
1. Are you only an “authorized user” on a credit card account, not the actual cardholder?
2. Are you dunned for debts of a former spouse?
3. Are you being dunned for debts of your adult child?
4. Are you being dunned for the debt of your minor child?
5. Are they trying to collect a debt owed by a deceased relative?
6. Has the Statute of Limitations run on the claim?
7. Are they trying to collect on the separate debt of a business?
8. Are you the victim of Identity Theft?
9. Is the debt collector pursuing you for a debt incurred by somebody else and mixing up your credit information with the bad debts of someone else?
Does the collection agency continue to harass or dun you on a debt that you do not owe? Did the creditor send the account to a new collection agency after the prior collection agency sued, and lost, a debt collection lawsuit.
Are you a co-signor or are you only an “authorized user?”
There is a difference between being an “authorized user” on a credit card and being an account holder. If the account was opened by someone else and you are added as an authorized user, you are not automatically responsible for the account. Do not believe that you are liable just because your name is on a plastic card as an “authorized user.” Unless you signed the contract (i.e., the Card Member Agreement or whatever they call it, containing all of the legally required terms and disclosures), you are not legally responsible.
You need to review a copy of any alleged agreement or co-signor agreement, bearing your signature. Look at what you actually signed. If the creditor cannot provide it, they might not have such a document. If they want to sue you, they will need to produce it in court in order to win their case. Do not believe that they have any such document unless they can show it to you.
You also need a copy of every statement on the account. If you are a co-signor, you have the right to sue to principal debtor for indemnity and/or reimbursement. You may need all of the account statements in order to present your best case against your former friend, former spouse or relative. If they will not give you copies of these documents now, when they want you to pay money, do you think that you will be able to get them later on. What if your former friend had a bona fide dispute about charges or fees assessed against the account?
If you are divorced
Under California law, the Date of Separation, not the date of filing for divorce, nor the date of entry of the divorce judgment, that is the operative date for liability for community debts incurred by the former spouse. California Family Code section 910 states, “‘During marriage’ . . . does not include the period during which the spouses are living separate and apart before entry of a judgment of dissolution . . .” See, also, Family Code section 2623.
If you signed the original account application when you were married, Family Code section 910 will not help you because you are a party to the original contract. You are still jointly liable to the creditor for all charges on the account, even if the divorce judgment says otherwise. Advise: Close the account. Contact the credit card company and tell them that you want your name (and liability) off the account. If you get confirmation from the credit card company, you might be OK. Best is to close the account and open a new account, with a new account number, in your name only.
Debts of children.
Most often, you are not legally responsible for the ordinary debts of your children. A minor is not legal capable of entering into a contractual obligation. An emancipated or adult child is responsible for his/her own debts. The debt collectors are not even allowed to contact you without the permission of your adult child. However, if you co-sign or sign an account application, you are responsible.
Debts of deceased relatives.
Credit card companies push disability and death insurance that is not only over-priced but is primarily for the benefit of the credit card company. If the cardholder dies, this insurance pays the credit card company. If there is no credit card insurance, the credit card company can collect from the estate only if they go through the proper legal procedures.
The creditors of a deceased person must look to the estate of the deceased. If there is probate administration, the creditor are entitled to notice of the probate proceeding. Then, they have a limited amount of time to file a claim with the probate court. The executor/rix or administrator/rix can approve the claim or deny the claim. The creditor can sue the estate, within certain time limits. When that time limit passes, the money and property is distributed to the heirs free and clear of all claims against the decedent’s estate. The probate attorney representing the estate can give you specific guidance.
If there is no probate court proceeding, but there are assets, the creditors might be able to follow the assets distributed. When the estate is small, it may be possible to distribute assets without probate. I suggest that you pay for a one-hour consultation with a probate lawyer.
If the assets are held in a living trust or other trust, pay for a consultation with a lawyer. Each trust is different.
Do not pay the debt from your personal funds without talking with a lawyer, your lawyer. You do not want the creditor to report the account on your personal credit.
Do not allow a debt collector to prey upon your confusion during your time of grief. The debt collectors can wait. Are they going to sue someone who is no longer in this world? Probate may take a year, or several years. Their incessant telephone calls do not entitle them to any sort of priority to the assets of the estate. The representative of the estate needs to wait for all possible claimants to present claims before paying any debts except for the final expenses.
Business debts
Was the debt incurred by a partnership, corporation or LLC? Did you personally co-sign?
Identity Theft
There are special laws and remedies which offer some protections to victims of identity theft. Nevertheless, many times collection agencies will pursue and harass an identity theft victim or sell the claim to another collection agency, causing you to suffer additional frustration and harm.
California Civil Code section 1788.18 and 15 U.S.C. 1681g(d) establish a procedure which, if followed exactly, give the victim certain rights. Go to www.consumer.gov/idtheft for information. File a police report with your local police department and get a copy. Then prepare an “identity theft report.” You can use the FTC’s “theft complaint form.” Then, ask one of the major credit reporting agencies to place a 90 day fraud alert on your credit file. Then, place a seven-year extended fraud alert on your file. Get one free copy of your credit report from each credit reporting agency. This is in addition to the free copy that you are allowed once each year. Ask the credit reporting agency to block fraudulent information that appears on your credit report. The credit reporting agencies must then tell the creditors who reported the fraudulent information that this is identity theft. These creditors may not then turn the accounts over to collection agencies. Special rules apply if the thief is a friend or relative.
If you follow the procedures request by the statutes, but the collector continues to dun you, you have may be able to sue the debt collector and recover damages, statutory penalties and attorney’s fees. It is essential that, before suing, you follow the correct procedures for reporting that you are the victim of identity theft.
“Mixed File.”
The debt collector has, somehow, confused you with somebody else and is dunning you for somebody else’s debt. This is similar to identity theft, but is not caused by the intentional conduct of the person who really owes the debt. Names may be similar, or account information may have been mixed up by someone entering information into a computer someplace. This is called a “mixed file” in debt collection circles. You do not have the same rights as someone who can file a police report as a victim of identity theft.
Often these bills are quite old, and the collection agencies has paid for a service for “location information.” Many companies which provide location information to collection agencies do not consider themselves to be “consumer credit reporting agencies”, subject to consumer protection laws and regulations. The collection agency will call you and dun you. If the collection agency has paid money to “buy” the old debt and paid more money for “location information”, it will not give up unless you pay them. My general advise: Do not pay them on a debt that is not yours. It may just result in a recent collection being added to your personal credit file with the major credit reporting agencies. This is a serious negative on your credit. An old, unpaid debt may not be as bad on your credit as a recent “paid collection” or recent “debt settlement.” You should also be very careful about giving your real social security number, mother’s maiden name and other personal financial information to such a debt collector. They might just add this information to the file of the debt that they are trying to collect, thereby insuring many years of misery and undeserved bad credit.
Statute of Limitations
California law provides that the Statute of Limitations bars a lawsuit more than four years after an account goes into default. This is an “affirmative defense” which must be raised in an Answer to a lawsuit. Some credit card agreements provide that the law of some other state governs the contract. If so, check the Statute of Limitations in that state. If you live in California, the Statute of Limitations is four years from date of default. However, if your credit card agreement specifies that the law of the State of Delaware applies, Delaware’s Statute of Limitations is only three years.
Some courts, outside of California, have held that attempting to collect a debt that is barred by the Statute of Limitations violates the Fair Debt Collection Practices Act. Other courts have ruled otherwise. The appellate courts have not yet made a final determination on this issue.