Bankruptcy expert Leon Bayer answers real-life questions.
I got a Chapter 7 discharge about a year ago. Long before filing bankruptcy I got an extra credit card for my daughter to use. At that time the bank assured me that I would be the only person liable for charges on the card. My daughter just got her credit report and the credit card account appears as a charge off.
How did the company get her social security number? And didn’t it violate the agreement it made with me? My daughter is now 17 years old, and I’m sick over the thought that I ruined her credit.
I suggest that your daughter dispute the debt on her credit report. It’s not hard to do. You can learn how in Nolo’s article How to Dispute Errors on Your Credit Report.
In her dispute, she should state two things:
- that the credit card account is not hers, and
- that even if it was, she is under age 18 and is now voiding the contract, so does not owe the credit card company anything
I think this credit dispute will be quickly resolved in her favor. If it is, that annoying item will disappear from her credit report.
Here is a little background on each of these arguments.
The Credit Card Account Is Not Hers
The credit card company told you that you would be the only one liable for the charges, so the account never belonged to your daughter. Your daughter should state these facts in her dispute.
What If the Agreement Did Hold Your Daughter Liable?
But what if the credit card agreement did hold your daughter liable? It’s likely you no longer have documents proving the contrary. And credit card companies do issue extra cards to authorized users and hold the user liable. In this case, because the bank has her social security number, is it possible the agreement said she would be liable?
A Minor Can Void a Contract
Even if the credit card agreement did hold your daughter liable for the credit card debt, she can void the contract before she turns 18.
Because the law says that minors lack the capacity to enter into a contract, it gives minors the option to either (1) honor the contract, or (2) void the contract before he or she turns 18. (There are a few exceptions: Minors cannot void contracts for necessities, like food and shelter.)
Your daughter should immediately notify the credit card company and the credit repair agency that she is voiding the contract. She can do this by stating:
“While I believe that I never had a contract with [credit card company], if I did, I am now voiding the contract. I am under the age of 18.”
At that point, since there is no contract in place, your daughter does not owe the credit card company anything, and she can dispute the entry on her credit report.
A Novel Argument?
And if you want to try something new, consider this. Last July, the new Children’s Online Privacy Protection Act Rule (COPPA Rule) took effect in California. If you use the above tactics and still cannot get the item removed, you could hit the credit card company with a demand to remove the item on the ground that it is violating COPPA by publishing information pertaining to the identity of a minor. It might be a stretch to say that a credit report (which has a limited viewing audience) is “publishing” information about a minor and therefore violating COPPA, but it doesn’t hurt to make the argument. Rather than test new legal waters, perhaps the credit card company (or the credit reporting agency) will back down and remove the item.
Leon Bayer is a Los Angeles bankruptcy attorney. He is a partner at Bayer, Wishman & Leotta, a California law firm specializing in bankruptcy. The opinions and advice in this blog post are from Mr. Bayer alone, and should not be attributed to Nolo. By answering a question on this blog, Mr. Bayer does not become your lawyer.