When Your Ex Has Ruined Your Credit: Recovering From Coerced Debt

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image of a couple sitting back-to-back representing a client of Schlanger Law Group that must deal with coerced debt after a breakup

Rebuilding after a bad relationship can be difficult enough without facing unexpected credit and financial challenges. Unfortunately, far too many people divorcing or otherwise breaking off a relationship discover that they’re deep in debt, and their credit has been damaged by accounts they never knew about. Relationship-related coerced debt is more common than most people know.

In 2018, about 2.2 million Americans faced identity theft committed by someone they knew. Economic abuse is common in relationships that are otherwise abusive. A study from the National Domestic Violence Hotline found that 70 percent of domestic abuse survivors stated that their partners withheld financial information from them. Additionally, more than one in two survivors stated that an abusive partner generated debt in their names through coercive or fraudulent transactions.

Most Common Types of Coerced Debt

After a breakup, one of the spouses may need to deal with coerced debt such as:

  • One spouse or partner running up debt on the other’s credit cards without his or her knowledge
  • One spouse or partner secretly opening new credit card accounts or taking out loans in the other’s name
  • One spouse or partner financing a vehicle or other major purchase using the other’s information
  • One spouse or partner threatening the other with physical harm in order to force him or her to sign credit applications, provide access to credit accounts, or otherwise generate debt against his or her will

Many people are not even aware their identities have been stolen until they separate from their spouse or until they have been contacted by creditors or denied opportunities due to discrepancies in their credit history. Additionally, it can be difficult to file a police report, as accessing account documentation and credit reports can be challenging for victims of economic abuse. Many assume that debt run-up in their names by a spouse is their responsibility, or that they’re liable for those massive credit card bills because a live-in boyfriend or girlfriend used their information to open the accounts. And, creditors, financial institutions, and credit reporting agencies are often all-too-eager to reinforce that idea, shifting the burden to the victim.

Identity theft is still identity theft when it is committed by a spouse, significant other, or other friend or family member. And, federal law protects victims in several ways. For instance:

  • The Electronic Funds Transfer Act (EFTA) requires financial institutions to conduct an investigation into timely-reported fraudulent transactions and to reverse transactions found to be unauthorized.
  • The Fair Credit Billing Act imposes similar obligations on credit card companies.
  • The Fair Credit Reporting Act (FCRA) requires credit reporting agencies to investigate disputed entries on your credit report and remove or correct erroneous entries.
  • The Federal Trade Commission (FTC) offers an identity theft reporting portal to help survivors recover their identities and fight for their rights.
  • These and other consumer protection statutes provide remedies ranging from a court order requiring correction of the erroneous entry and/or declaration that the victim is not responsible for the debt to monetary damages.

As cases of coerced debt become more common, many organizations across the country have begun pushing lawmakers to enact better protection for consumers. The Institute for Women’s Policy Research has called for more local and state governments to redefine domestic violence and assault laws to cover economic abuse. Many states have taken to amending their definition of identity theft to account for cases of coerced debt and create more protection for survivors of abuse.

Next Steps for Victims of Coerced Debt

If you’re being pursued for payment of a coerced debt or your access to credit has been affected by reporting of debt run up by a former spouse or partner, you have options.

First, report the unauthorized or fraudulent transactions to the financial institution or credit issuer. Do this in writing, and be clear and concise in your dispute, and include any supporting documents such as police reports.

You will also want to check all three of your credit reports (TransUnion, Equifax, and Experian) for items you don’t recognize or believe to be fraudulent. If you find entries for accounts taken out without your consent or charges made by your ex-spouse or significant other without your consent, dispute those directly with the credit reporting agency.  Again, it is best to do this in writing and to attach all supporting materials.

If you’ve disputed coerced or fraudulent charges with a bank, credit card company, other credit issuers, or credit reporting agency and been ignored or received a cursory notice saying the debt or account has been verified, that doesn’t have to be the end of the road. We frequently help victims of identity theft fight back.

To learn more about how we may be able to help, call us, or complete the quick questionnaire on this website.

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