Liability of Authorized Credit Card User

A common question from bankruptcy clients concerns liability for credit card debt of a spouse is who an authorized user of a credit card issued in the name of the other spouse filing bankruptcy. Clearly, when both spouses sign the credit card agreement they are each individually liable for all charges regardless of who made the purchase. The general rule is that a spouse is not liable for credit card debt if he or she is authorized to use a card but did not agree to accept liability by signing the credit card agreement. Nevertheless, some banks have gone after authorized users for credit card debt balances on cards issued in the name of spouse who file bankruptcy.

None of my bankruptcy clients have ever asked me to research this issue. I have heard that some banks do go after authorized users on the theory that whoever signs the credit card charge slip is liable for the purchase amount even if the credit card was not issued in their name. Even then, the user could make collection difficult by insisting the credit card produce original credit card charge slips and verify signatures. The user could also defend collection by taking the position that purchase were on behalf of the bankrupt cardholder. Because it is difficult for banks to actual establish liability for the purchaser, other than the named cardholder, banks usually do not pursue collection against people other than named cardholders who are party to the credit card agreement.

posted by Jonathan Alper, asset protection and bankruptcy lawyer, Orlando, Florida