Saturday, February 16, 2013

Identity Theft By Family Members: When a Loved One Runs Up Debt in Your Name

There are certain stories I hear over and over and over again. Here's the most common one:

My daughter/son took my credit cards and ran up a debt of xxxx. I can't pay it. Now collection agencies are hounding me for money and my credit is ruined. How can I get this debt off my credit report? What do I do?

Sound familiar? Believe it or not, this is a clear cut case of identity theft. When most people think of identity theft, they picture a stranger digging through their trash for banking or credit card information and then using that information to make purchases. Many cases of identity theft, however, aren't strangers but the people we love the most. Swiping a credit card from a parent, sibling or other family member and using it to make unauthorized purchases constitutes identity theft, and its illegal.

Your Rights As an Identity Theft Victim

Did a loved one slip away with your credit card?
Not only does identity theft leave you facing a mob of snarling, angry creditors, it can also destroy your credit history. There are numerous protections in place for identity theft victims. For example, the credit bureaus must block any information on your credit report that appeared as the result of identity theft. For example, if the thief ran up a credit card debt, the credit card company will report your lack of payments to the credit bureaus. Unless you make the credit bureaus aware of what happened, your credit scores will plummet through no fault of your own. You also have the right to be absolved of any responsibility for paying the debt. After all, you weren't the one who ran up the bill and didn't pay.

When Identity Thieves Are Family Members

In order to property report a case of identity theft, the victim must first notify the police and obtain a police report detailing the incident. This is the part that trips up victims who suffered identity theft at the hands of a loved one. They don't want to be at fault for getting their loved on in trouble with the law. To illustrate my point, here are two actual cases I have dealt with: I have changed the names, of course.

Situation #1: John contacted me a few years ago looking for help cleaning up his credit. His credit report was littered with unpaid debt and collection accounts. The damage was severe. While I was trying to draw up a plan that would help him improve his scores, he offhandedly mentioned that the debts were a result of his ex-wife applying for credit cards in his name, maxing them out and leaving him stuck with the debts.

I was delighted. At the time, there wasn't much I could do. Credit repair, in John's case, would take years. I told John that his revelation was great news. He could clean up all of the damage quickly. All he needed to do was file a police report and start the process of reporting the debt and clearing his name. He was appalled that I would even suggest such a thing. According to him, he couldn't do something so heinous to the mother of his children.

Situation #2: Paul and his wife came to me for help getting a collection agency off their backs. The collection agency was demanding payment on an $18,000 debt for a loan that Paul never received. They finally admitted, reluctantly, that the debt wasn't a random identity theft. Paul's nephew had impersonated him to get the money. Even though Paul was facing a lawsuit and the possible loss of his home and other assets, he refused to "get my nephew involved."

These aren't the only cases I've seen. This is common enough to be frightening. Usually the thief is a child, however, and I have yet to run across a single parent who had been the victim of a child's identity theft that was willing to force that child to suffer the consequences of his or her Really. Stupid. Decision. These family members seem to think that they would be doing something harmful to the other person, whereas a debt is just money. In the big scheme of things, family relationships tend to take priority over protecting oneself.

Reporting Family Members for Identity Theft

What I need you to understand is that reporting a family member who has stolen your identity isn't a strike against that person. The individual in question is the one who made the decision to run up debt in your name and must take on responsibility for that. If they get arrested, sued, etc., those consequences are the result of the choice they made to steal your identity, not the result of the choice you made to set the situation right.

Put a stop to fraudulent shopping sprees
In the case of parents, its even more vital that you report the theft. If the identity thief gets away with the crime, he or she WILL strike again. The cycle won't stop. Any consequences the thief suffers as the result of his behavior are his consequences. I cannot stress this enough. Make your family member face the music. Not only does it save you from the legal perils of unpaid debts, it teaches the individual a strong lesson that he desperately needs.

Consequences of Not Reporting Identity Theft

If you decide that its a better choice to protect your thieving loved one rather than protect yourself, consider the fact that until these creditors know you aren't liable for the debts they will continue to viciously pursue you. If the creditor sues, you could face wage garnishment or the creditor could drain your bank account repeatedly. In some cases, creditors even seize property. Thus, it becomes a case of either protecting the thief or the other innocent victims under your roof that will suffer as a result of your silence?

Report identity theft. Always.

Related Articles

Can a Collection Agency Take My House?

Removing Collections That Aren't Yours From Your Credit Report

Make Yourself Judgment Proof


2 comments:

  1. Credit Repair Specialists that permanently delete and block negative accounts from your credit report, with a 99% effective success rate! We end the constant collection calls and letters and Fix Your Credit within 30 Days. identity theft credit repair

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  2. While it wouldn’t do you good to take immediate legal action (except maybe for that ex-wife scenario), family members who are using your identification without permission have to be confronted with this problem before it spins out of control. A good way to do so is to talk to them with an authority figure (equal or higher than you). Or the said authority figure can talk to them alone if they’re not comfortable directly talking to you. That way, they'll know that what they’re doing is wrong, and knowing you’re making a mistake is the first way of correcting oneself.

    – Kurtz & Blum

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