Are Victims of Identity Theft Liable for Debt?

When you become a victim of identity theft, someone could use your information to accumulate debt in your name. The thought of having to pay for someone else's debt can be frightening, but there are laws in place that will limit your personal liability if this happens to you.

Credit Card Charges

One of the most common ways that identity theft occurs is with fraudulent credit card charges. When this happens, you will not be held liable for most credit card charges. In most cases, the most that you could have to pay for is $50. As long as you tell your credit card company within 60 days that the charges are fraudulent, it will be reversed and removed from your account. If you wait longer than 60 days to tell the credit card company, you might have to pay for the charges.

New Accounts

Another way that you could become a victim of identity theft is if someone opens a new account in your name. For instance, someone could get in your mailbox and use a credit card offer to open a new account. This person could then use the credit card to rack up thousands of dollars of charges in your name. When this happens, most state laws allow you to get out of paying the debt. When you find out about the charges, you need to report them to the credit card company immediately.

Debit Cards

Many people now use debit cards that can be used as a debit or credit card. If you lose one of these cards and someone uses it to make fraudulent charges, you need to act quickly to limit your personal liability. If you report the loss to the bank within two days, you will only be responsible for maximum of $50. If you wait beyond two days but fewer than 60 days to report the loss, you will be liable for up to $500 of charges. Beyond 60 days, you have unlimited liability for any fraudulent charges.

Checks

When you use checks, there is always a chance that someone could try to pass fraudulent checks on your account. If this happens, most states will not require you to pay for the debts incurred. While you may initially be charged for the checks, if you report the incident to your bank immediately, it will generally reverse the charges. Most checks take a few days to clear both banks, and while this is happening, you can report the loss. This makes it important to look at your online bank statement frequently so that you can avoid this situation.