Your responsibility regarding a relative's debt depends on the account type, your state of residency and your relationship to the account holder. Generally, you are not liable for debts you did not incur or sign for. Additionally, your rights are protected from illegal or unethical debt collection tactics. If you feel a debt collector violated your consumer rights---including protection from harassment---contact the Federal Trade Commission or your State Attorney General to file a complaint.
Community Property
If you live in a community property state, you may be responsible for your spouse's debt. Excluding premarital contracts and state debt exceptions, creditors can and will contact both the husband and wife, take them to court and even garnish joint accounts. Community property states consider couples jointly responsible for assets and liabilities incurred during the marriage. Additionally, creditors may target community assets in the event an indebted spouse dies.
Join Accounts
If you are a co-signer or joint account holder, you are equally liable for debt with the other account member. This may include credit cards, store credit, mortgages, car loans and any other secured or unsecured debt. Authorized users on an account are not responsible for the debt as they did not sign an agreement or otherwise apply for the credit. Adversely, if you authorize a relative to use a credit card in your name, you are liable for the debt.
Children
Dependent on state laws, you may or may not be responsible for your underage child's debt. Most states require parental permission when a child acquires credit. If the credit is extended without parental consent, creditor collection actions may be limited. Adversely, if your child applied for credit fraudulently by lying about their age, they may face penalties.
Concerns
Unfortunately, some debt collectors try to collect from relatives regardless of their responsibility to pay. Not only is this practice unethical, in some cases, it is illegal. The Fair Debt Collection Practices Act prohibits creditors from contacting anyone but the account holder, credit-reporting agencies, legal representatives and sometimes the spouse regarding the debt. Creditors may contact relatives in an attempt to find the account holder, but they are forbidden from making false claims in an attempt to collect.
Options
If a debt collector attempts to collect on a relative's debt, ask for proof of the debt and your liability. Under the Fair Debt Collection Practices Act, creditors must provide proof of the debt and your responsibility if you ask for it or dispute the claim. Disreputable collectors rely on the fact that you do not understand your consumer rights. If the creditor has no legal grounds for collection, asking for proof will often stop future attempts. You may also request---in writing---that a creditor stop contacting you and they must comply. The only time a debt collector may contact you after you tell them to stop is to inform you of further legal action.
0 comments:
Post a Comment