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Credit Score News, Tips & Advice « Credit Scores > Credit Score News > Deceased cardholder’s debts leaves spouse worrying for credit ratings

Deceased cardholder’s debts leaves spouse worrying for credit ratings

By Brian Anderson
Published: Sunday, July 25th, 2010

Mature business man and woman reading a newspaperA Texan resident complained that three of the credit card companies which manage her accounts illegally imposed “charge off’ on her records after her husband, who is the joint account holder, passed away.

Danielle Hauser reportedly received notifications from Chase, Amex, and Citi telling her that all her accounts were listed as “charge off. Six months prior to receiving the said notifications, Hauser’s husband passed with several unpaid debts left. Hauser’s initial concern was whether or not it will hurt her credit score after being put on the list. Furthermore, Hauser worried if she can have her account removed from the said list before dealing with the financial situation left to her by her husband.

Jeremy Simon, a consultant and credit score reporter of a credit card website, oriented Hauser about the different legalities applicable to her situation. According to Simon, Alaska, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Washington, Wisconsin, and Texas implement the community property law which considers spouses who are authorized users as joint account holders as well. He added that Hauser’s case is covered by the said law since her residency belonged to one of the aforementioned states which practice community property. In effect, Hauser becomes similarly responsible for paying her husband’s debts.

Chi Chi Wu, a staff attorney for the National Consumer Law Center, however said in an e-mail that Hauser may only be liable to those purchases that she actually made using their joint account. In addition, Wu pointed out that in some states, the authorized user may not be liable at all. The reason for the appearance of the unpaid debts on her account could probably be because most creditors rely on the living spouse or co-account holder in dealing with liability. This happens even if the living spouse is only an authorized user and has not made any of the charges. Wu added that the Hauser’s case is not the only time that creditors abused the liability loopholes of credit card laws.

However, Hauser is still advised to contact the credit card companies that manage her account to delete the illegal charged-offs. Simon said that the client may follow the instructions given on the report and contact Experian that it may be removed. Simon reminded that deleting the charge-off accounts should not put her name at a bad rep and drop her credit score. However, the traditional FICO score does include any credit card with the person as an authorized user in their calculation of scores. Craig Watts, FICO’s spokesman, said that this can implicate two things toward the authorized user’s credit scores. If the credit is in good standing and has a clean payment records, credit score is very likely to increase. However, if the account is put in the delinquency or charge off list as in Hauser’s case, the credit score is highly expected to drop.

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