Advice on using credit cards that are in someone else's name

Although you have been using these credit cards, they were opened by your mother; therefore, she is probably the only person legally liable for the debt. If you are forced to stop making regular monthly payments on the accounts, the creditors will likely try to collect the balances owed from your mother, since she is the account holder of record. I think you will understand that the issuers do not know what arrangements and side agreements were made between you and your mother as to who charged what and who was to pay the scheduled monthly payments to the banks. The issuers can only go by what their records show as to who accepted their credit offers, thereby forming credit contracts. It is this contractual relationship that makes the use of credit legitimate and enforceable by the issuer.

Collection efforts on delinquent accounts usually begin with demand letters and collection calls from the creditor directly or from third party collection agencies. While many credit card companies never escalate their collection efforts beyond this initial stage, some creditors may decide to pursue legal action against your mother in an effort to collect the balances owed. Most creditors do not sue consumers to collect on outstanding credit card accounts, as the expense of litigation often outweighs the benefits for the creditor. However, you should know that it is possible that your mother’s creditors could sue her to collect on any outstanding debt. To read more about debt collections and the various options available to consumers to resolve their debts, I encourage you to visit the Bills.com debt help page.

Various options exist to assist consumers who are struggling with their monthly credit card payments. One option to consider is a Consumer Credit Counseling Service, or CCCS. CCCS companies offer numerous services, such as financial counseling and budget planning, as well as Debt Management Plans (DMP). In a DMP, the CCCS would arrange a new payment amount with each of your creditors, usually based on a reduced interest rate. You would then make a single monthly payment to the CCCS which would distribute the funds to your creditors, based on the new payment amounts. There are several drawbacks to CCCS, though. First, depending on your creditors, it may not be able to reduce monthly payments enough to improve your financial situation. Second, it may have a negative impact on your mother’s ability to obtain credit, so you and your mother may not wish to enter into a DMP if she is planning any large purchases, such as a home or auto, in the near future. Third, the average DMP takes around five years to pay off debts, so you must be willing and able to commit to a long-term repayment plan.

You may also want to consider the services offered by debt settlement firms. Rather than making monthly payments to your creditors, these programs negotiate lump sum settlements of your debts, frequently reducing your debts by 50% to 60% of your principal balances. These programs usually take only 2-3 years to complete, so this is a good option for many people to rid themselves of debt in a relatively speedy manner. In many cases they can also reduce your monthly payment toward your debt. There is one major drawback to debt settlement programs, though–they will significantly damage your mother’s credit while in the program and for at least a year or two afterwards. However, a debt settlement program is probably the fastest way to resolve these debts; once you repay the debts, your mother should be able to rebuild her credit score through careful management of her credit accounts. To read more about debt negotiation, I invite you to visit the Bills.com debt negotiation page.

If you and your mother cannot afford a CCCS or debt settlement program, or if she is unwilling to take the risk of continued collection activity which can accompany such programs, your mother may wish to consider filing for bankruptcy protection. A Chapter 7 bankruptcy filing may allow your mother to discharge all unsecured debts which she owes, including these credit card accounts. If your mother is considering filing for bankruptcy protection, I would strongly encourage her to consult with a qualified bankruptcy attorney in your area to discuss the various types of bankruptcy available to consumers, and how filing bankruptcy could help resolve her debts. If you would like to read more about bankruptcy, I encourage you to visit the Bills.com bankruptcy page.

You should know that you are not alone in the financial difficulties you are experiencing. Many consumers are struggling to pay their mortgage, rent, and other essential expenses, not to mention their credit card bills. Hopefully one of the options I mentioned above will help you resolve your financial difficulties. I wish you the best of luck for the future and hope that the information I have provided helps you Find. Learn. Save.

Best,

Bill

www.bills.com/