Authorized Users and Bankruptcy: What Happens On Credit Reports and What Can You Do?
One of the first questions I always ask my clients is are you an authorized user on anyone’s account or vice versa. Why? Although legally, an authorized user is NOT responsible for the credit card balances on the account, too many times we have seem errors arise from the “Big 3” three credit reporting agencies when another party files for bankruptcy. Although the Experian site states here that this will NOT happen, as a practice point in our law firm, we always advise clients to do the following BEFORE they file for bankruptcy protection:
- At least 1 month BEFORE you file a bankruptcy case you need to remove your name for anyone’s credit account that you are an authorized user on.
- At least 1 month BEFORE you file a bankruptcy case you want to remove anyone that is an authorized user on your account.
It would be nice if we lived in a perfect world and the credit report agencies didn’t make mistakes but the Consumer Protection Bureau cites this as one of the main credit reporting errors for consumers: https://www.consumerfinance.gov/ask-cfpb/what-are-common-credit-report-errors-that-i-should-look-for-on-my-credit-report-en-313/
While there is no set time period for when creditors or the credit bureaus will update your credit profile, you can always access free websites such as Credit Karma and check to see your authorized user status. Transunion posted the following article in regards to reporting times: https://www.transunion.com/blog/credit-advice/how-long-does-it-take-for-a-credit-report-to-update
For any additional information about bankruptcy and how it should be properly reported on your credit report, you can contact us at [email protected] or call 404-889-8663.
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