JOINT vs. AUTHORIZED USER

[Noctilum]

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@Anonymous wrote:

You may be responsible for your spouse's credit card debt as an authorized user if you live in a community property state.  The laws varies with each community property state (Alaska, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin) so if you are a resident of one of these states, you have research your state's laws regarding community property.

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That is correct.  I live in AZ and went through a divorce a couple of years ago and have first hand experience with the situation.  It basically boils down to if you can convince the judge your spouse should be held liable for the authorizations and the perfect example is the wife charging attorney's fees on the husbands credit card.

[GregB]

A better way to think of this might be that all purchases are normally joint BEFORE Date of Separation. You are still "fully married" up to that date. Expenses AFTER DOS can be joint or separate. One spouse charging a divorce lawyer to the other spouses CC is likely to make that date the official DOS - or at least make it unlikely that DOS would be AFTER that date.

If only one spouse is working at that date, then it is less likely to matter as the court is almost certain to think it is reasonable for either party to hire an attorney and that any amount those attorneys charge is reasonable.

The creditors are under no obligation to worry about DOS or any court orders. They will only be concerned with whose name is on the loan or CC. They will also likely go after the other spouse for any deficiency. The creditor is not party to a divorce proceeding and will not be affected by any court order. If there is a court order that is not followed by the other spouse, they will only be in violation of the court order. This means that the flaky or irresponsible spouse has great ability to cause damage to the more responsible spouse.

[barbaralee]

I am really confused about some who say the auth users can be held liable for the debt. Does THE BANK recognize this? For example, the bank does not recognize a divorce decree. So lets take the story of the husband who's wife charged her attorney fees to his cc... the judge orders that the wife is responsible for the debt... what if she defaults? Who is the bank going to go after? The person who the cc's name is under, or the one who the judge ordered to pay? Obviously she is in contempt and the man could take her back to court, but from my understanding the bank will still go after the man because their contract was through him, not her.

[GregB]

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@barbaralee wrote:

I am really confused about some who say the auth users can be held liable for the debt. Does THE BANK recognize this? For example, the bank does not recognize a divorce decree. So lets take the story of the husband who's wife charged her attorney fees to his cc... the judge orders that the wife is responsible for the debt... what if she defaults? Who is the bank going to go after? The person who the cc's name is under, or the one who the judge ordered to pay? Obviously she is in contempt and the man could take her back to court, but from my understanding the bank will still go after the man because their contract was through him, not her.

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In your example above, the bank will go after the man. The bank is not a party to the divorce and cannot have the terms of their original agreement modified by the court. In a community property state, the bank could then go after the other spouse anyway.

In your first sentence, did you mean they had to be an authorized user in order to make the charge in the first place?

[Anonymous]

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@GregB wrote:

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@barbaralee wrote:

I am really confused about some who say the auth users can be held liable for the debt. Does THE BANK recognize this? For example, the bank does not recognize a divorce decree. So lets take the story of the husband who's wife charged her attorney fees to his cc... the judge orders that the wife is responsible for the debt... what if she defaults? Who is the bank going to go after? The person who the cc's name is under, or the one who the judge ordered to pay? Obviously she is in contempt and the man could take her back to court, but from my understanding the bank will still go after the man because their contract was through him, not her.

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In your example above, the bank will go after the man. The bank is not a party to the divorce and cannot have the terms of their original agreement modified by the court. In a community property state, the bank could then go after the other spouse anyway.

In your first sentence, did you mean they had to be an authorized user in order to make the charge in the first place?

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If the credit card used was an American Express Card, or a credit card issued by USAA or any one of a number of other banks which hold AUs contractually liable for purchases they make on the account, the bank can also go after the wife.

This holds true whether or not the individual was an official AU.  Most contracts hold that any person who you allow to use your card is a defacto AU and, thus, liable.

[barbaralee]

I guarantee you on USAA's part: the only time an auth user may be held responsible for their own charges is if the primary or secondary defaults.

[Anonymous]

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@barbaralee wrote:

I guarantee you on USAA's part: the only time an auth user may be held responsible for their own charges is if the primary or secondary defaults.

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Not just USAA, but every issuer with the ability to hold an AU liable does it that way.  First they will go after the account owner(s).

Per USAA's Universal Credit Card Agreement:

You are an Authorized User if you:

• Were granted express, implied, or apparent authority to use the Credit Card or the Account.

• Make a transaction that results in a direct or indirect benefit to a Cardholder or any member of the Cardholder’s immediate family.

And you are liable for:

The transactions you make plus any related interest or fees.  We will not attempt to collect from you unless a Cardholder refuses or fails to pay us.*

*At our option, we may transfer amounts you owe to a separate account in your name for billing purposes and report the account to the credit bureaus. The billing-only Account will not be open to new transactions.

[Anonymous]

I am in a similar situation.  Including my husband's cards which I am an authorized user of, I have way more cards than I need or use.  However I have always been told that it is "healthy" to only have about 3 revolving credit cards.  I think it is a generally accepted rule (which is why I said "general"), but obviously not some proven textbook thing. 

I have no doubts that having cards won't hurt you when it comes to new approvals... the lenders don't care about helping you achieve a healthy spending habit really, they just want to give you reasons to spend more lol. So yeah, if you have several cards in good standing, I'm sure that will come off as a good thing.  However, I do recall reading somewhere that if you have many cards, it may come across in your credit report that you are short of cash and desperate of credit. 

Not sure if it's backed by fact, but it does help me try to keep the number of cards down to a manageable size : P Perhaps not exactly three cards but close to it.  My mother in law always stresses the importance of having only 3 cards (Strictly speaking I think this means 3 cards you are using, especially if you are young and don't have decades of credit history), and my in-laws have ridiculously good credit & financial portfolio.

[Anonymous]

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@Corvidae wrote:

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@Anonymous wrote:

You may be responsible for your spouse's credit card debt as an authorized user if you live in a community property state.  The laws varies with each community property state (Alaska, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin) so if you are a resident of one of these states, you have research your state's laws regarding community property.

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That is correct.  I live in AZ and went through a divorce a couple of years ago and have first hand experience with the situation.  It basically boils down to if you can convince the judge your spouse should be held liable for the authorizations and the perfect example is the wife charging attorney's fees on the husbands credit card.

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I am in CA and went through it too.   I only had 1k CL basic VISA card from NFCU at that time ... I've been always paying with checks (wow!  it is so old) and cash.

Here is what was happen; He filed in December 2003 and Divorced in November 2004

• He claimed he has 20k debt on his credit cards ... I've never heard about it until then.  Is this true?  Really?  I still don't believe this debt.
• I requested those statements ... which he has never provided in the court file nor to the court at hearing.
• He asked for me to pay half of it, which is 10k  ...  Nice!  
• Then, my attorney came in said that's not right  ... I am not Joint nor AU on his ccs.
• The court order I received on this his ccs debt was 5k ... which is 1/4 of his debt.
• Still it is ridiculous to me and my attorney told me Quote: Don't worry.  No one can't come to you to get your money to pay for this debt.Quote:
• Of cause, I don't have enough income for myself and was not paying anything ... moreover, there was no instruction about how I need to pay this debt.  Which is credit company's information was not provided to me.
• A few yrs later, he sent me an e-mail said Quote: You don't have to pay $50,000 any more.Quote:  ... I provided this e-mail to the judge when I returned to the court and he asked for that 5k payment.
• The result ... the judge puts her arms and shoulder up in the air with her palms up and looked at his attorney that tells she can't do anything. 
• I received a file from his attorney later, but I did not see anything about his debt payment of 5k. 
• So, I requested a transcript ...  and nothing in there too.  I guess since it was a just a gesturer, there are no way to record anything.  

* It has been many yrs since then and I haven't heard anything from his cccs ~ Thank you goodness ~ 

Addition to the information in above: This is part of Community Property story.

• I had saved money in the saving acct.
• One day, he asked me how much do I have in my bank acct.
• I showed my bank statement to him ... 10k
• We separated right after due to the DV by him to me ... removed from Base Housing by Military Protection Order.
• He requested to have 5k ... half of 10k ... from that saving.
• The judge asked me about that 10K at the hearing.  My respond ... I no longer have that money because I used that money on my Attorney's Fee.
• The result .... No court order to give 5k to him. 

*  I believe he has planned some what to get my saved money for the children's future school fund ...

*  My advise to everyone ... be careful when your spouse ask for the saved money suddenly!! 

[drkaje]

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@barbaralee wrote:

I guarantee you on USAA's part: the only time an auth user may be held responsible for their own charges is if the primary or secondary defaults.

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USAA allows Authorized users to add other authorized users. Also, when rescinding AU status, the primary account holder must request new card numbers or is responsible for any/all additional charges.

USAA will only go after an AU if the primary fails to make good. At that point they will put something on the CR for charges made.

USAA also reserves the right to deny AU status. This makes me assume they do some sort of soft pull to check on piggybacking

I don't know if they report AU accounts. DGF isn't on my card. Her credit is perfect so another card, especially a new one, wouldn't help one bit.

* Added by edit: I forgot to mention that USAA does not allow partitioning credit limits. You don't have the ability to limit an AU's spending, like with some companies.

I almost never read cardholder agreements but was surprised at how forthcoming they were. Every responsibility for taking the risk was put in black and white.