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  1. #1
    Join Date
    Apr 2009
    Location
    New York
    Posts
    4

    Default Authorized User's Liability for Credit Card Debt

    I have spent some time searching the internet and I have come across some conflicting views on authorized users and I would ask for clarification here.

    I have an Amex card (the type that is payable each month, not a revolver type like Visa). I am responsible, my spouse is an authorized user. I am contemplating Chapter 7 in the next few weeks. My spouse and I do not have anything else "joint", and her being an authorized user is the only thing even close to such in concept (I understand the difference).

    Some forums on the internet say that my bankruptcy should have NO impact to my spouse, as she is only an authorized user and not jointly liable. Some other forums say that Amex has tried via more recent agreements to say that authorized users "may" be responsible for the total account. I can contact Amex to get the verification documents but I am hesitant to do anything.

    I pulled my spouse's credit reports, and indeed, the Amex does show on all 3 agencies as "authorized user", but the balance is the total balance. We had recently canceled my spouse's card. We also have contacted the agencies to say that her Amex card was canceled.

    If I were to file Chapter 7 soon, can anyone please comment on what one would expect would be the impact to my wife's credit as well as what exposure she has? (vis a vis this sole issue, the Amex card where she is an authorized user). Her card was canceled but the last monthly balance is still outstanding (from when her card was active). Almost all of the charges was from my card and some small amounts were from her "authorized user" card. I've been counseled at this point to avoid making any credit payments given the imminent BK filing but I am tempted to pay off her amount or the total amount, as I am very concerned that Amex may try to put my BK filing issues onto her credit report.

    For a multiple reasons, it is imperative that my spouse's credit not be impacted, particularly by Amex (beyond the standard textbook reasons).

    Any thoughts or advice? Thank you.

  2. #2
    Join Date
    Jul 2008
    Posts
    853

    Default Re: Authorized User on Amex

    FICO changed the scoring formula to exclude authorized user accounts from the score. Legally, she cannot be held liable for the card, but remember that nothing stops Amex from suing her- you can sue anyone for anything. (There was a Senator who sued God last year)

    Her defense would be that she never had a contract with Amex.

  3. #3
    Join Date
    Apr 2009
    Location
    New York
    Posts
    4

    Default Re: Authorized User's Liability for Credit Card Debt

    Thank you for the response. Can I get a further thought on this?

    If I understand the worst case scenario, that Amex believes that she "could" be responsible for just the charges on her card, Amex could potentially sue her. The overwhelming amount of charges were done on my card (again, I am the credit responsible behind this account and she was only the authorized user) and there were just very small purchases on her authorized-user card. If I were to file Chapter 7, I would expect that the stay would protect me against Amex.

    But, then is the WORST case scenario that Amex sues my wife (who is not a party to my Chapter 7) for JUST the dedicated charges that were on her authorized-user card? That is, they could not reasonably sue her for the entire amount, right (for the charges done on my dedicated card)?

    Second question. We have already closed her authorized user account, removed such card references from all three of the credit bureaus, and even verified such with Amex directly... if I were to file Chapter 7 later on, is there any reasonable likelihood that Amex would RE-REPORT her authorized user status onto her credit bureaus (as it is deleted now)?

    Behind all of this is a theme that my Chapter 7 is my fault; and there really is no reason for my spouse to suffer at all, beyond what I have already made her suffer.

    Thank you.

  4. #4
    Join Date
    Jan 2008
    Location
    Toledo, OH
    Posts
    16,303

    Default Re: Authorized User's Liability for Credit Card Debt

    What makes you think divemedic's response is lacking?

    He's spot on. Your bankruptcy should not affect your spouse and anyone can sue anyone for anything.

    Whether or not they prevail is another matter entirely. Yes, Amex COULD sue your wife but they wouldn't really have a legal leg to stand on, as authorized users are not responsible for payment on the cards they use. But there is nothing under the sun that could stop them from trying.

    If you're this worried, you ought to look into a consult with an attorney in your area. First consultation is usually free.

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