Remove authorized users before filing for bankruptcy


Once removed, any bad credit behavior will be wiped from their credit reports

Sally Herigstad is a certified public accountant and the author of “Help! I Can’t Pay My Bills: Surviving a Financial Crisis” (St. Martin’s Press, 2006). She writes “To Her Credit,” a weekly reader Q&A column about issues involving women, credit and debt, for, and also wrote for MSN Money, and, and has guested on Martha Stewart Radio and other programs.

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QuestionDear To Her Credit,
My adult boys are on my credit card as authorized users. They
have never used the cards. I was in a bad accident and became disabled. I now
will have to file for bankruptcy.

Should I remove them as authorized users before the bankruptcy?

Being authorized users on my card has already damaged their credit. I’m just
trying to figure out what I need to do so that they do not have anything
negative on their credit report regarding the two credit cards on which they are
authorized users. – Angela


Dear Angela,
often add their children to their credit cards to help them build a credit
score. When you add someone to your credit card as an authorized user, the
payment history and other information for the card is almost always reported on the new authorized user’s credit report, as well as on yours.

the card is in good standing, this strategy can give a young person a head
start in building a solid credit score.

all goes well, the younger person then can start building credit on his own. As
soon as his credit history is established and he has a strong credit score, he
can apply for his own card and then drop the authorized user arrangement so the
parent’s finances are no longer entangled.

things do not go well, however, being an authorized user can do more harm than good to
the younger person’s credit. As you’ve discovered, when you have a
financial crisis and fall behind on credit card payments, the negative
information can sometimes be reported on your sons’ credit reports.

Not all authorized
user cards report negative information to an authorized user’s credit report,
but many do. One late payment can dramatically lower a person’s otherwise
pristine credit score. Being an authorized user on a card in default is a
credit score disaster.

Revoke your sons’ authorized user status

the solution is simple, and the results should be fast. Call the credit card
company using the number on the back of your credit card, and have both of your
sons removed  as authorized users from your cards.

The next time the credit card companies report to
the credit bureaus, generally within one full billing cycle, your sons will not be on the

None of the information for that card, past or present, should appear
on their reports. (Take note that as the primary account cardholder, canceling
the card altogether will not erase your past history on the account from your
credit report.)

your sons haven’t done so already, they need to get their own cards or other
form of credit if they are over 21 or can prove they have a steady income.

Credit scoring is a fact of life, and it takes time to build a good history and
score. Your sons could probably get started with a gasoline or retail card.

After six months to a year of using that card responsibly by charging small
purchases and paying the balance off in full, they could apply for a major
credit card.

Another method is to start with a secured credit card, which
requires your sons to keep money in an attached account. After your sons prove themselves
as reliable credit risks, they can move on to regular credit card accounts.

Seek alternatives to bankruptcy filing

your own situation, I recommend you do not rush into bankruptcy until you’re
sure it’s the best solution for you.

Video: Chapter 7 vs. Chapter 13 bankruptcy

Filing for bankruptcy is stressful, and
it’s not as easy or as inexpensive as some ads would lead you to believe. If
you have assets, you could lose some of them in the bankruptcy, depending on
your situation and the laws in your state.

Bankruptcy is an important tool for
dealing with insurmountable debt, but it’s not the only one. If medical bills
are your main concern, you may be able to settle for less than the full amount
without filing for bankruptcy, for example.

Be sure to get qualified legal
advice in your state and carefully examine all your options before you take
such an important step as filing for bankruptcy.

See related: Clearing authorized user account information, How to graduate from parents’ credit, cut authorized user cord, 7 times when bankruptcy makes sense

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