Be careful if you are an authorized user on a credit card (or married to one)!

Are you aware of the differences between an authorized user of a credit card and a joint account holder?

Texas attorneys Allmand & Lee have put together a great post explaining these differences in detail.

For people considering a bankruptcy filing (especially married people), the differences can be crucial. A joint account holder is just as legally obligated to pay the entire outstanding balance on a credit card as the primary holder is. In a bankruptcy situation, that may mean they both may need to file (or one might choose to file a Chapter 13 case to get the benefit of a co-debtor stay), in order to prevent further collection activity by the card issuer.

Authorized users are not treated the same by the law, however. An authorized user can run up charges on a particular account, but only the cardholder is responsible for payment. In bankruptcy, the cardholders’s filing alone will discharge the entire debt. The authorized user doesn’t need to file for bankruptcy herself, unless she has other pressing debt problems.

One problem, pointed out by Allmand & Lee, is that over-agressive collection agencies don’t necessarily make these fine distinctions. They often just bully authorized users into paying on the assumption that they may not know their rights. So if you are thinking of bankruptcy and “have someone” on your credit cards with you, take a few minutes and research what that relationship really is.


By Doug Beaton

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