Ask The Money Coach

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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.

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Question: I am a 23-Year-Old College Student with a Bad Debt of About $12,000 With American Express. I Believe the Statute of Limitations in Maryland is 3 Years. I Do Not Remember the Last Time I Made a Payment to Them. I Found a Receipt Showing a Payment in December 2006. But When I Called American Express, Their Records Don’t Go Back That Far. What Should I Do? And How do I Find Out When My Statute of Limitations Has Been Reached?

Answer: It’s kind of odd that American Express wouldn’t be able to track down this old debt that you had – especially considering it wasn’t chump change. It’s very likely, though, that the $12,000 was assigned to a collection agency or simply written off as uncollectable – especially since it was apparently more than three years ago and you were just 20 years old. As you were/are a college student, I’m assuming you weren’t making big bucks back then (or now) and Amex may have known that their chances were between slim and none, in terms of getting you to pay back what you owed. What to do now? Pull each of your credit reports from Equifax, Experian and TransUnion. You can get them online free of charge via www.annualcreditreport.com. See if that Amex debt shows up on your credit reports as a collection account, charge-off, judgment, or anything else negative. If not, do nothing. If so, contact the creditor/collection agency listed only if you are financially prepared to begin a repayment plan to pay off what you owed. Otherwise, do nothing.

The Statute of Limitations on Credit Card Debt

Lastly, here are a few ways to check the statute of limitations in your state. Each state has different statutes of limitations for past-due debts, depending on if the debt was based on a written contract, an oral contract, a promissory note, or an open account. Credit cards are usually categorized as open accounts. The statute of limitations for credit card debt ranges from 3 to 10 years, based on where you live. You can click the following link for a state-by-state list of statute of limitations. themoneycoach1.wordpress.com/2009/09/14/statute-of-limitations-on-debt/.

Alternatively, to check the statute of limitations on debts in your state, contact your State Attorney General’s Office or go to www.naag.org and click “The Attorneys General”. I checked for Maryland, since you mentioned that state and I believe that is where you live. You are correct that the statute of limitations there is three years. All the more reason, as I suggested, to just do nothing about that debt. Chances are no one is contacting you about it because the statute of limitations has expired and the debt is no longer legally enforceable.

Your Credit Rating

This does not mean, of course, that it can not still appear on your credit report. That’s another matter entirely. Negative information, such as late payments or collection accounts, can stay on your credit report for 7 years. If this info is on your credit report, rest assured knowing that because it is more than 2 years old, it is likely doing far less damage to your credit rating than it probably did more than three years ago when the account first went delinquent.  So if I were you, I wouldn’t worry excessively about it.

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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.

Well, under the Fair Credit Reporting Act, the original lender is the one that is supposed to be noted on your credit report because that’s the creditor with whom you had a deal. Credit card companies and banks do have the right to sell uncollectable debts to bill collectors, and that is apparently what’s happened in your case. In fact, the debt appears to have been sold multiple times. I don’t think you’ll ever be able to get a credit reporting agency to change the creditor listed. But that shouldn’t really worry you because, frankly, it has absolutely no impact whatsoever on your credit rating or your credit score. Focus instead on the $525 debt that you’re trying to get cleared – or the $800 they’re trying to get you to cough up. Read this column and askthemoneycoach.com/2010/03/i-received-a-notice-from-a-lawyer-representing-a-credit-card-company-citibank-who-is-suing-me-for-a-delinquent-debt-i-took-your-advice-and-paid-off-all-my-delinquent-debts-unfortunately-this-is-m/” target=”_blank”>this one too about how to negotiate with bill collectors.