PLEASE PLEASE PLEASE help - my relative ruined my credit score (760 to 602 in half a year)

[Anonymous]

Hi Everyone,

Sorry for my very long first post and I hope this is the right place but I REALLY need your help.  My credit has been ruined by someone else and I am completely stressed out. =(  My score went from 760 last year to 602 a week ago.

Basically, I reluctantly (didn't know how to say no) let my aunt use a credit card that I opened but never used myself about 10 years ago, during college.  The beginning balance was a few thousand dollars.  I never saw the bills b/c she was paying it (she lived at my house, and still does) so I never really knew what was going on with it but I trusted her.  Apparently she had only been paying minimum payments and the interest/limit/balance had snowballed to almost $51,000!!!!  She actually opened another cc 3 yrs ago in my name w/o me knowing and that one now has a balance of $8,000.  Half a year ago she decided to work with an attorney to settle both cards (without me knowing for a while), which means she had not been paying and both have since been charged off/written off.  My score went from 760 last year to 602 (EX) a week ago.  My 2 cc's that I use regularly went from a limit of $16,800 to $300 (over night), and the 2nd one went from $9,800 to $1,000 within a few months, with a couple decreases in between.  And I have been getting calls from BofA collections (not sold to outside collections yet).

Things actually get more complicated than that:
1. Because of my parent's financial difficulties, I took over the mortgage.  Then I refi-ed into a 5 year ARM 3 yrs ago at interest only to lower my monthly payment, with the intention of refi-ing into a 30 year traditional when things get better.  With my current credit score, there is no way I will be able to refi and will be forced to sell the house when the time comes.  
2. I am very worried that my low score will be a hindrance for any job opportunities.
3. I got married a few months ago, and my husband and I had been planning to buy a house since before we got married.

So....what should I do????  My aunt promised me that she is working with the attorney and that she will rush to start paying asap and negotiate for the shortest amount of repayment time she can handle (she says a year or less).  We are thinking of just selling the house (there's enough equity) and paying off my 2 charge offs and deal with my aunt later, just to save my credit (or to start rebuilding my credit).  I have not lived in the house for years but have been paying the mortgage, property tax, insurance, utilities.  They are a huge burden on me and I cannot last too much longer with my current salary and I need to move on and have my own life and family with my husband.  Is selling the house to pay off the charge offs my best option?  I want to try to sell it before any lien is put on me. Is there anything else I can do right now to prevent things from getting worse?

I have always had good credit when I tried to obtain various things such as car loans or when dealing with mortgages and refi's of my parent's house and that is why I never paid much attention until now.  And the fact that I placed my trust in my aunt.  Horrible mistakes I know... So figuring out how credit and credit score works is all kind of new to me and I am scrambling to research and find a way.  

As an aside, as angry, stressed, and disappointed as I am, I like and love my aunt.  She's had a tough life and some financial difficulties of her own.  I truly feel really bad for her.  She has helped take care of me most of my life.  However, she has also ruined a lot of my life right now.  My parents have recently moved out of the country and do not need the house now so selling is not a problem.

Thank you for reading this long post and please help with any advice you can offer.  Thanks!!!

[marty56]

Welcome to the forum.  Paying off the CO wont erase the late payments and BofA most likely BofA wont remove them.  I know you love your aunt but she is guilty of ID theft so you must file a police report and claim that the charges and the other credit card are not yours.  The aunt working with an attorney will do zero for your credit and settling any debt for less than is owed will harm your credit even further.

Most likely your aunt wont go to jail since the CCCs only want their money but please keep in mind that if you don't file the police report, your aunt would have destroyed your credit for 7 years and most likely this will prevent you from buying a home and it could effect your ability to find a job since if they pull your credit and ask about it, they would wonder why you didn't file ID teft report if the collections and lates weren't really yours.

Sorry to be so blunt but I have seen this story many times before here and it never gets any better.

[smallfry]

Sorry to hear a story like this. It can get worse. Have you gotten any 1099's from the credit cards yet? You might be liable for taxes on any balances paid that was  less than what you owed on the original CC balances too.

[Anonymous]

Thank you so much for your replies. 

My husband actually received a call from Vikings at our house yesterday and spoke to them.  They said that the debt is still with BofA and they were collecting on behalf of BofA.  They made me an offer of about 50% and said they could still go lower, with about $10-15k down and the rest in payment plan.  At first the collector had a pretty bad attitude but after my husband briefly explained to him my situation his attitude became a lot nicer and cordial and said that now it made more sense to him since the rest of the report was perfect besides the 2 big charge-offs.  We asked him what would happen if we settle he said that it would show $0 balance, settled in full on my credit report.  We told him that we needed to speak to my aunt and he said okay but that he needed to make a decision before the end of the month.  My husband did not ask him what happens at the end fo the month but I am assuming it will be sold to outside collections.   

I spoke to my aunt and she said she has/or will have about $15k and that is what her attorney is trying to settle for.  She also said that the attorney advised that I not speak to the collector since they are already negotiating and my speaking to the collector will undermine their negotiations.  She gave me the attorney's phone number so that I may speak to him myself but I have not been able to reach him yet. 

I spoke to another attorney friend of mine (in a different field) and he said that it is true if the attorney is already negotiating, that if I also negotiate with the collector, it would undermine the attorney's negotiation since there should not be 2 negotiations going on at the same time.  He suggests that I speak to the attorney first to see how I feel about him before I decide to let him do the negotiation or deal with the collector myself. 

Right now, I don't know who to trust, the collector or the attorney.  I did not speak to the collector myself but my husband said that he sounded nice and cordial and said that he would not put the story of my situation on record but will keep it in mind when he goes back to BofA.  At the the end of the conversation he even suggested that I enroll all my cc's in fraud alert.  If I am able to negotiate something that my aunt can afford, do I still have a chance at PFD?  Or is the amount too large and too new?  Or, if I can have them put in writing that they will report $0, settled in full, is it something I should consider?  The collector said that once that is done, my credit would begin to fix itself and even though it is still a negative item, given the rest of my report, it may be seen as an anomaly and may not have as much a negative impact.  When I get a chance to speak to my aunt's attorney, I will ask him questions on how he plans to settle and what the terms are. 

And no, I did not receive a 1099 I guess because it has not been settled yet?  If I settle with a PFD (if possible), or if the account shows $0 balance, I still may or may not receive a 1099, correct?

I just wanted to know what all my options are first.  Thanks for all your insights and advice.

[Anonymous]

I can offer you a couple things I would do in a situation like that. First and foremost, if your aunt has an attorney, you need an attorney. This is your credit history, your name collection agencies are calling for, you need to be involved in the clean up. Not her giving you a phone number to her attorney and you can't reach him. He should be available at your service ASAP. If he won't make time for you and is only interested in protecting the status of your aunt, then you need an attorney for yourself to protect your rights and guide you. You are obviously trying to fix this, but how can you when you are being told not to interfere by the same woman that put you in this boat? I believe your attorney friend is correct, but you need to find an attorney in the field you are dealing with to protect your interests.

If I were in your shoes, I'd get a lawyer, I would go to civil court, and sue the aunt. I would sue for as much as she could pay up at one time, turn around, and offer that to the CA/BOA, whoever has it. I'd offer the amount owed, show the papers you had filed to get the money, and ask for reinstatment of the card to your name only, and get the fraud alert. That way it won't stay as a charge off on your report.

Please for your sake and your future, get an attorney. Obviously something is going on if your aunt is still hiding information on the account and giving it to her attorney, who uses the aunt as a middle person to tell you to stop interfering, you'll mess up their settlement. I'm sure all the attorney is looking at is settling this account for as little as possible so they can give you a letter, "all paid, settled for less owed, owes nothing further", and then leaving. You will then be left with the bad history, a charge off, and a settled account. Plus, you'll have to worry about BOA ever taking you as a customer again through their credit products.

I am so sorry you are going through this! It's horrible. I had a roommate when I was 19, just starting out. I ended up in a bad place of not being able to pay my "building new credit" cards and accounts as I was paying all living expenses, and realized far too late I could have sued her for "borrowing" my credit cards without my knowledge or permission, and trashing my credit. Don't agree to anything as a middle person. Don't agree to the OC or CA a payment plan relying on your aunt to repay. That could quite possibly never happen. Just see about an attorney, and have the attorney weigh out what your best options are, not just for avoiding a judgement and ending collection phone calls, but also to ensure you won't be paying out of your pocket the repayment, or the interest rates associated with bad credit.

You'll get a 1099, if they decide to...sometimes they do, sometimes they don't, if you pay less than owed on the account, I think $500-$1000. If you (save) about 500-1000 dollars or more in the settlement, that can be considered taxable income by the IRS, and will be subject to taxes.

Best of luck to you! So sorry this happened. I hope it all clears up soon.

[Anonymous]

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@Anonymous wrote:

Hi Everyone,

Sorry for my very long first post and I hope this is the right place but I REALLY need your help.  My credit has been ruined by someone else and I am completely stressed out. =(  My score went from 760 last year to 602 a week ago.

Basically, I reluctantly (didn't know how to say no) let my aunt use a credit card that I opened but never used myself about 10 years ago, during college.  The beginning balance was a few thousand dollars.  I never saw the bills b/c she was paying it (she lived at my house, and still does) so I never really knew what was going on with it but I trusted her.  Apparently she had only been paying minimum payments and the interest/limit/balance had snowballed to almost $51,000!!!!  She actually opened another cc 3 yrs ago in my name w/o me knowing and that one now has a balance of $8,000.  Half a year ago she decided to work with an attorney to settle both cards (without me knowing for a while), which means she had not been paying and both have since been charged off/written off.  My score went from 760 last year to 602 (EX) a week ago.  My 2 cc's that I use regularly went from a limit of $16,800 to $300 (over night), and the 2nd one went from $9,800 to $1,000 within a few months, with a couple decreases in between.  And I have been getting calls from BofA collections (not sold to outside collections yet).

Things actually get more complicated than that:
1. Because of my parent's financial difficulties, I took over the mortgage.  Then I refi-ed into a 5 year ARM 3 yrs ago at interest only to lower my monthly payment, with the intention of refi-ing into a 30 year traditional when things get better.  With my current credit score, there is no way I will be able to refi and will be forced to sell the house when the time comes.  
2. I am very worried that my low score will be a hindrance for any job opportunities.
3. I got married a few months ago, and my husband and I had been planning to buy a house since before we got married.

So....what should I do????  My aunt promised me that she is working with the attorney and that she will rush to start paying asap and negotiate for the shortest amount of repayment time she can handle (she says a year or less).  We are thinking of just selling the house (there's enough equity) and paying off my 2 charge offs and deal with my aunt later, just to save my credit (or to start rebuilding my credit).  I have not lived in the house for years but have been paying the mortgage, property tax, insurance, utilities.  They are a huge burden on me and I cannot last too much longer with my current salary and I need to move on and have my own life and family with my husband.  Is selling the house to pay off the charge offs my best option?  I want to try to sell it before any lien is put on me. Is there anything else I can do right now to prevent things from getting worse?

I have always had good credit when I tried to obtain various things such as car loans or when dealing with mortgages and refi's of my parent's house and that is why I never paid much attention until now.  And the fact that I placed my trust in my aunt.  Horrible mistakes I know... So figuring out how credit and credit score works is all kind of new to me and I am scrambling to research and find a way.  

As an aside, as angry, stressed, and disappointed as I am, I like and love my aunt.  She's had a tough life and some financial difficulties of her own.  I truly feel really bad for her.  She has helped take care of me most of my life.  However, she has also ruined a lot of my life right now.  My parents have recently moved out of the country and do not need the house now so selling is not a problem.

Thank you for reading this long post and please help with any advice you can offer.  Thanks!!!

---

Sorry to hear about your situation.

My understanding is that there are two credit cards involved that were a) in your name and b) used by your relative.  CC #1 you gave her voluntarily and CC #2 was opened fraudulently.

Unfortunately, you have 100% liability for CC #1.  You do have recourse against the relative, but ultimately the creditor is perfectly within their rights to hold you liable and report the entire experience with the credit reporting agencies.  For the thousandth time -- It is seldom, if ever, a good idea to let someone be an authorised user on your account.  Lesson learned.

You should not, however, be liable for CC #2.  This is a case of identity theft and it is imperative you file a police report for identity theft lest you end up with complete liability for this debt, also.  I'm not sure when the fraudulent account was opened, but in case you are reluctant to expose your family member to criminal liability the statute of limitations of ID theft / fraud prosecutions is normally only about 2 or 3 years.  You'd need to find out the exact SOL in your state's criminal procedure law.  Once you have a police report on file you should be able to clear out the debt on CC #2.

Do you need an attorney?  I doubt it.  There is not much an attorney can do for you -- aside from bill you -- that you can't dop yourself.  1) File a police report for ID theft.  2) Make arrangements to pay CC #1. 

Taking care of your liability on CC #1 depends on several factors.  How much is your relative prepared to pay for that CC?  When was the date of last activity on that account?  What state are you in?  Depending on the answers to those questions you can formulate a plan of attack.

[Anonymous]

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@Anonymous wrote:

I respectfully disagree, 06.

I think that once it gets to the file-a-police-report stage, Aunt may become a lot less likely to pay cc#1.   And the police report must happen.  I stand by my statement that a lawyer is very smart.   Prior to hiring a lawyer, Fightingon may negotiate that lawyer fees are the liability of Aunt and that lawyer gets paid upon winning the case, nothing if the case is not won.  This is common. 

I can't imagine how difficult this situation is, but I urge you to protect yourself.  I know she is a loved one, but she's a loved one capable of committing fraud against HER NIECE.   I really, genuinely wish you well. 

Edited for clarity.

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It's always good to have an attorney.

However, in this case there is nothing an attiorney can do to solve the problem other than collect a minimum of $1500 as a retainer.  That the aunt should also pay for the attorney is being overly optimistic considering that she is already paying her own attorney and is also looking at $50k + in debt to repay.  There is also the factor that the aunt could file bankruptcy and eliminate completely any and all liability over CC #1 and any legal fees she should reimburse her nephew / niece.  The aunt ios already looking to pay off the CCs by making entering into a payment plan -- so it's not like she even has the 50 cents ont he dollar to pay off what the settlement will likely entail in full in one lump sum.

The CC opened fraudulently was three years ago.  In many states the statute of limitations would preclude any prosecution for the offense.  One needs to take this into consideration also when anticipating the relative's reaction to having a police report filed.  Even if the SOL has not expired on the identify theft / fraud possibility, it by no means assures prosecution.  DAs will take many things into account and also the aunt can decide to use what funds she has to pay off CC #2 completely to probably avoid prosecution leaving OP on the hook for CC #1 completely -- with limited, if any, recourse against the aunt.

There's not a whole lot one can do to solve this issue.  It simply boils down to filing a police report to eliminate liability for CC #2 and either pay or not pay CC #1. 

For a $1500 retainer I would tell a client in this same situation that a) have the aunt's lawyer negotiate exclusively a payoff on CC #1 and then b) file a police report over CC #2.

If OP has the money to pay a lawyer, great.  If $$ is limited, having a lawyer is not indispensable.

[Anonymous]

Family, good or bad, can be a burden sometimes. I clearly and perfectly understand your situation.

I helped my sister many years ago to find her a place to stay. Everything was under my name. I only visited twice during the 5 years she stayed there... and get called by a collection agency later for $45,000. I was fortune enough to have the money to pay in full but it took many many years to remove the collection, my score tanked rock bottom. Now, I no longer help anything creditwise whether family or not. I never needed any loans, but looking at my personal credit tanked for something I didn't do really hurt badly.

I wish you luck.

[guiness56]

I agree with O6 and not just because he is an attorney.  What he says makes perfect sense.

CC#1 OP is totally responsible for, CC#2 not responsible for.

How would an attorney help the OP anyway?

[Anonymous]

Thanks everyone again for all your advice, insights, and well wishes.

So yesterday, I spoke to my aunt's "attorney" (more on that later).  He started off cordial but got really worked up and began yelling at me when he asked me about my conversation with the CA.  He loudly repeated over and over again that under no circumstances should I speak to any CA.  I would undermine or ruin any chances of him negotiating a good deal.  When I asked him where he was in the progress of negotiating he answered he didn't know yet and that negotiating a settlement depends on lots of factors, one of which is my luck.  Then I asked him what are the terms he was trying to reach and the final dollar amount.  He again didn't give me a straight answer.  I asked him if he will negotiate for deletion of the TL upon settlement.  He basically told me to forget about it because it was too difficult to do.  Then I told him the CA needed an answer by end of March otherwise it is going to be sold to outside CA, and that's when he started screaming even more, saying that all the CA is good at is intimidating people, that I should completely disregard the CA.  He then went on to say that who cares if it gets sold to outside CA.  It doens't make any difference.  My credit is already ruined so just let it rot.  He will do everything he can to drag this on for as long as possible to try to get the lowest amount of settlement possible (exactly what leah5570 said).  I asked him for a copy of the contract.  He gladly agreed to email to me, but of course doesn't follow through.

After that, I spoke to my attorney friend and he asked me if I had any info on this guy.  I had intended on asking him the name of his law firm and address but I had forgotten throughout his tirade.  I googled his name but didn't come up with anything but when my friend googled his phone number a debt & credit counselor type business came up.  Another thing was when I asked him for his email address, he gave me a hotmail address, which immediately set off an alarm in my head, but his continued yelling about the CA again distracted me.  So with all these clues and the way he acted, we highly doubt that this guy is really an attorney. 

My friend felt things are getting way too complicated and he found a friend who is in the field and gave me the contact.  I haven't had a chance to speak with him yet but hopefully he will be able to help me out.  I don't have a lot of funds to work with but I also have a lot to lose so I will see what happens.