Not My Debt. What Do I Do?
Written on October 22, 2009 – 12:32 pm | by PT |What should you do when you have unpaid debt in your name that’s not exactly your debt? I recieved this email from a reader and thought I’d share with you guys (my emphasis added):
“I went to work for a man 5 years ago and he wanted me to have a credit card but the bank couldn’t set it up so that he was on the card and have me, a non-relative, as the secondary on the card, so I got the card in my own name and he was supposed to pay it off each month. He did not do so. It now has a balance of $4800 even though I have not worked for him for 2 years. He rarely makes a payment. I have never made a personal charge or personal payment on this account as this was not to be a personal card, only for doing business in his name. I was the nanny for his three girls for three years.
Before I left his employ we did get him added to the account as someone with equal responsibility but then Bank of America would not release me from the account because I have excellent credit and he has bad credit.
The account goes to collections at the end of November. Bank of America says that they will reduce the account to $2400 if someone pays it off before it goes to collections.
I have all the paperwork and his signatures and copies of letters to and from Bank of America showing his taking responsibility for the debt and letters showing that they won’t release me from the debt because of his credit. My desire if for my husband and I to get a home equity loan on our house (which will be paid off in 6 years) in order to redo the kitchen and the bathrooms.
Will the paperwork I have to back up my story allow someone to loan us the home equity money or will it be a detriment to our attempts to get the loan?
If my husband should unexpectedly pass away will my personal credit be so bad that I will be unable to get a credit card or home equity loan under my name?
Do I: A. Continue to ignore it and ignore the collections calls that may come my way? Suffer with a big ding on my credit for 7 years until it is discharged? or B. Make the deal and pay it off myself to save what is left of my credit even though it is not my debt?”
I’m not a legal expert. But I can tell you that if my company (I work for a large software corporation) didn’t reimburse me for my approved business expenses, I’d file suit immediately. This is their debt that I incurred ONLY because I’m trying to do my job.
So obviously, my first thought is to take the former employer to small claims court. The paperwork you have, types of charges incurred, along with the employer/employee relationship will show that he is responsible. I can’t see a reason that a court wouldn’t hold him solely responsible for the debt.
But court will take some time. And BOA has given you until the end of November to settle. It seems like a good deal to me. I’d go ahead and pay them the $2,400 and then take your former employer to small claims court. Sue him for the charges, damage to your credit, and headache. Then, once you’re awarded the judgement. Send that paperwork to the credit bureaus to clean up the dings to your credit. Then you should be able to get that home equity loan, no problems.
UPDATE: I recieved some more info from the reader. This may help clear up some of the questions in the comments.
Thanks for letting me know you answered my question on your blog. I have not paid on the debt yet. I think I’ll call BOA again next week. A few weeks ago I spoke to the man I worked for and he told me again that he would take care of it. Empty words.
While I worked for this man he was sued numerous times. He ignores them. He knows this is his debt. He would just not show up in court. So if he would not show up then what happens?
My understanding from your blog is that if I take him to court, I would have legal, court ordered, proof of my story which I would use to fix my credit.
And if he doesn’t show up to court, what happens to the suit? Do I automatically win? Or is it rescheduled and rescheduled?
Fixing my credit would be a good thing. Paying on the debt just makes me mad.
Right now I am in limbo, leaning toward paying the reduced debt. I don’t want to sue him if it is going to be a long drawn out thing because he will not show up to court.
Thanks so much for taking the time to put this on your blog and send me an email. I really appreciate your time.
I advised her to contact her State’s labor board and pick their brains about moving forward. I told her that they’d likely award her the suit if he didn’t show and she had the proof it was his expenses.
What do you guys think? Do you think the court would award her the money? Should she pay the debt using the deal BOA is giving her prior to going to court? Will she ever improve her credit? Should she expect to do so, given that it was her who actually used her own personal credit card?
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