Name on Accounts & Responsibility for Debts

As a general rule, you are responsible for paying your own debts. Thus, you and only you face the consequences should you fail to pay off accounts that exist in your name only. In certain situations, however, individuals whose names are present on an account are not responsible for paying off the debt, and those not affiliated with the account can be held legally liable for payment.

Spousal Debt

While spouses often opt to share joint accounts, some spouses keep their liabilities separate by opening separate credit cards and loans. Unfortunately, owing a debt in your name only doesn't always provide your spouse with legal protection should you stop making payments. Certain community property states hold both spouses equally liable for paying off debts --- regardless of which spouse incurred the debt or whose name was present on the account when the debt was incurred.

Authorized Users

As a credit card holder, you have the option to add other individuals to your credit card account as authorized users. An authorized user receives a credit card in his own name directly connected to your account and your credit card company reports the debt on his credit report. The authorized user, however, is not legally responsible for making payments to the creditor --- you are. Even if the authorized user made the bulk of the charges, you accepted full responsibility for the user's spending when you added him to the account.

Co-Signers

Co-signers serve as an insurance policy for lenders. When an applicant does not qualify for a loan or credit card because her credit history or income does not meet the lender's guidelines, a co-signer can pledge his own credit and income to help her qualify for the loan. The co-signer signs the application with the applicant --- but unless he is a co-borrower, his name does not appear on the account itself. If the borrower defaults, the co-signer then must repay the debt in its entirety.

Identify Theft

Victims of identity theft are a special case. Their names are on the account in question and their signatures are present on the original application --- but they aren't liable for the debt. In the case of identity theft, another individual applies for an account in the victim's name without her knowledge. Although any debt the identity thief incurs is legitimate, the victim is only liable for a small amount of the debt, if any, depending on the type of account the thief opened or used. For example, if the identity thief opened up a new credit card in the victim's name, federal law prohibits the credit card company from holding the victim liable for any charges exceeding $50.