Old Debt Now Dogs Bankrupt Man's New Girlfriend

As published in The Star-Ledger, December 18, 2011

Q. I filed for bankruptcy in 2010 and debts were discharged, therefore my credit report is on the skids. One department store account was discharged in the bankruptcy but my girlfriend started receiving letters and calls from a collection agency asking her to pay off the debt. She never used the card or signed anything, but this debt is showing up on her credit report. What do you recommend in such a situation other than paying off the debt? 

— Bankrupt

A. The Brain is glad to hear you’re trying to help, but your girlfriend is going to have to take some actions.

A discharge under the bankruptcy code, like the one you received in your case, benefits only the debtor, said Ilissa Churgin Hook, a bankruptcy attorney with Hook & Fatovich in Wayne.

When a debtor receives a discharge, the debtor is relieved of the burden of paying the discharged debts. Co-debtors, and any person or entity that personally guaranteed the debt, would remain liable to pay the debt.

"Here, your girlfriend is only liable on your account if she is an obligor on the account, meaning that this was a joint account or she personally guaranteed the debt," Hook said. "From the facts you assert, it does not appear that she is liable."

Hook said if your girlfriend never signed anything or used the card, it’s curious how the store and/or the collection agency has her name and Social Security number, which would be needed to report the debt on her credit report.

Your girlfriend should send a letter to the collection agency contesting her obligation to pay the debt and she should demand copies of any documents that show evidence that she is liable on the account. Hook said the collection agency would bear the burden of proof on this issue in a lawsuit, so it should be able to produce these documents, if they exist.

In the letter, she should explain that she was not a joint account holder and that she is not responsible for the debt, said Gerri Detweiler of Credit.com.

"She should ask the collection agency not to contact her again. Send the letter certified mail, return receipt requested, and keep a copy indefinitely," she said. "She should also state in the letter that she wants this removed from her credit reports immediately."

Next, Detweiler said your girlfriend should get her credit reports from all three major credit reporting agencies and dispute the listing for this debt on any of the reports. She should do this in writing — not online — to fully protect her rights and to have a paper trail.

If this doesn’t clear it up, Detweiler said, she should talk with a consumer law attorney.

One more warning from Detweiler: The collection agency may sell this debt to someone else, so she should be sure to keep copies of all correspondence about this debt and copies of her credit reports so she has a paper trail.

- A "Biz Brain" column by Karin Price Mueller