Ask The Money Coach

Posts Tagged ‘Banks’

Image via Wikipedia

Question: My Husband Has a Motorcycle Loan in My Name That I Did Not Sign For. I Have Knowledge of the Loan But Did Not Sign For It. We are Having Marital Problems Now. I Have Disputed This Loan With Equifax and They Will Not Remove It. He is Not Making Payments On Time. What Can I Do?

Answer: This is a very unfortunate situation because it sounds like even though you didn’t personally sign for the motorcycle loan, you knew that you husband was getting the loan in your name (i.e. using your credit in order to get the loan). Even if you didn’t know what he was doing, your recourse and options are going to be limited because I assume that many months (maybe years) have passed since he originally got the loan. The time for you to speak up about it – or to let creditors or the credit bureaus know that you did not authorize the loan – would have been immediately after you learned of this. If he took out a loan without your knowledge, authorization or consent, then that is identity theft. If you can prove that it was fraud, perhaps by showing that it was not your signature on the loan contract, then you may have an outside chance at getting this loan off your credit. However, that may be a long shot. Weren’t the statements coming to your house each month and didn’t you see them? Doesn’t your husband live in the same home with you and didn’t you ask how he got a motorcycle? How long has it been that he’s had that motorcycle? I know these questions may sound harsh. But from the financial community’s perspective, it may seem like you are complaining about being on the loan now that you and your husband are having marital problems and he is not making the payments.

Under the law, if your name is on a credit account with your husband, (such as a mortgage, credit card or car loan), then you are both liable for that debt – even if you divorce. Right or wrong, that’s the law – and not just in community property states either.

Evaluating Your Other Options

Since your husband is not making timely payments, you have a handful of other options:

a)      make the payments yourself – and preserve your credit rating;

b)      try to convince him to pay on time

c)      see if you can work out a voluntary repossession, where he would turn the motorcycle back into the lender/finance company (but your credit would be impacted)

d)      consider whether a financially responsible family member or friend can take over the payments and use the motorcycle, which will relieve your husband of paying each month and may also keep your credit intact

What to Do With the Credit Bureaus

Additionally, if you think that divorce is likely, I would start closing out all joint accounts and notifying your creditors of your impending or actual separation. You should also put a credit freeze on your credit files so that no new credit can be obtained in your name. Lastly, pull your credit records from Equifax, Experian and TransUnion, and sign up for a good credit monitoring service for the next year or so. You want to make sure there are no other accounts opened by your husband of which you may not have been aware.

Related articles by Zemanta

• 5 Loan Options for Those With Good Credit (wisebread.com)
• Perfect Credit: 7 Steps to a Great Credit Rating (askthemoneycoach.com)

It sounds like you have little or no equity in your house. I’m guessing that’s the case based on a number of things. You bought your house in 2006, during the “no money down” era, when most homebuyers put little to no down payment for homes. You stated that your mortgage is “more than it should be”.  And you indicated that your lender won’t do a refinance. Given all of this, you have a couple of options: One, try to refinance your home with a different lender so that your payments are more affordable. There’s no reason for you to be locked into your current lender – unless you have a loan with a hefty prepayment penalty or something like that. Getting a refi done will take equity in the home and good credit. If you can pull one off, then at least you’re not as cash-strapped.

Moving to a bigger home is another matter entirely. Not only do you need a down payment (that’ll be your equity) and good credit, you also need to come up with closing costs, and to figure out how to first unload your current property. I have no idea what your budget looks like, what you and your spouse’s combined income or expenses are, nor what the real estate market is like in your area. So it’s difficult for me to offer you options that would help you to out of a financial jam. But you haven’t expressed any other financial problems, outside the fact that your mortgage is too high and that you really want to move to a bigger place. Recognize that having a bigger house is a “want” at this point, and not a “need.” If selling or renting are not feasible, I don’t see many options left. You may have to wait until the market turns around and you can sell your existing house in order to come up with the cash necessary for another residence. It would not be wise to buy another house and simply default or “walk away” from your current condo solely because you want a bigger house. If the house was greatly under water – say 25% or more – and you and your husband just couldn’t afford it, maybe because you were unemployed or something, then I might suggest considering your options regarding walking away. But nothing you’ve said to me indicates this. So I think you should try to have a little patience, beautify the home you currently have, and try to ride out this housing downturn. I know it’s not a pretty picture right now. But in the long term you’ll be glad if you wait and buy your new home under the right conditions, with your finances and your credit in tact.

My best advice is to keep very detailed records of all your transactions, conversations, payments and all correspondences with your lender. Sometimes, mortgage companies and banks will refuse partial payments. And rather than cash a check that they deem to be less than the full amount due, they’ll return the entire check. It sounds like something to that effect may have happened in your situation – at least with that roughly $3,000 payment they’re allegedly going to return. I noticed that the full amount of money in dispute — that $3,000, plus $2,400 that supposedly has not yet been applied – actually equals a little more than the $5,300 that they claim you owe.

I know it’s frustrating to get the run around and to not have clear answers. But I think you really do know (or should know) if you are in arrears or aren’t. You said you’re in foreclosure. And I assume that’s because you’re behind on your mortgage. Are you behind solely because of these disputed payments, or is there something else going on? If your payment delinquency is only due to these outstanding payments that you’ve made, but have not yet had credited to your account, then I would get some legal help in dealing with this matter. Reach out to a free legal aid clinic in your area, or turn to a reputable foreclosure prevention group for additional help. One good anti-foreclosure group is NeighborWorks (www.nw.org).

NeighborWorks is a national non-profit organization that employs a team of mediators to act as go-betweens for lenders and borrowers. NeighborWorks counselors often work out deals for homeowners. They also run the popular toll-free foreclosure prevention line: 888-995-HOPE.

Except under certain circumstances, I generally don’t recommend that people cancel credit cards, especially in the current environment because doing so can hurt your credit scores. Listen to this podcast answer for more information on how that happens. Regarding paying the minimums on your other cards, yes, that can be a smart strategy if you want to put more effort into knocking out that Visa card more quickly. Read this article also, in which I offer negotiating tips to get your credit card interest rates lowered. However, if the company doesn’t budge on the high interest rate or those nasty monthly/annual fees, you might consider canceling the card — but only if you have another credit cards and other accounts with a longer credit history. If you don’t have another card, just wait until you get a zero balance on your Visa card. Then apply for a national brand credit card with no annual fee and a decent rate. When you get approved, then you can cancel the old Visa card. This way, you won’t be held hostage to a credit card that isn’t doing you much good.

Congratulations on launching your business. The search for financing is a constant dilemma facing entrepreneurs. Read this article for some ideas.

http://askthemoneycoach.com/2009/03/best-place-to-find-grants-loans-and-financing-for-entrepreneurs/

Also, see this post on special resources for minority and women-owned businesses:

http://askthemoneycoach.com/2009/03/additional-help-for-minority-and-women-owned-businesses/