How to rebuild credit from coerced debt
September 3, 2019
Coerced debt is debt accrued from all nonconsensual, credit-related transactions that occur in an abusive relationship. If you owe money to creditors as a result of manipulation from your partner or spouse, you are not alone.
The obligations that remain for victims of debt coercion can have serious consequences. You may not be able to pay bills in full or at all, which results in damage to your credit. If you need to leave your living situation for your own safety, having credit problems introduces even more difficulties – such as not being able to rent a temporary home or buy a vehicle.
Once you secure your own personal safety first, your next steps need to be ensuring your financial safety. Understanding your rights is a crucial component to rebuilding your credit. And it’s important to know that coerced debt is something you can deal with. Here’s how.
Methods of debt coercion
A person can wreak havoc in your financial life by running up balances that are attached to your name, through lies or acts of intimidation. However they may arrive, any unpaid credit card bills and loans will be part of your credit history and factored into your credit scores.
According to BeckysFund.org, an organization dedicated to ending and preventing domestic and dating violence, there are five basic types of coerced debt:
Despite many of the safeguards, there are still ways that someone close to you can abuse your trust when it comes to finances. For example, your partner may file for bankruptcy during the course of your marriage, specifically to gain control over the way your collective assets are divided. If you have shared debts, your pattern may deliberately not pay, knowing that you will be left with the payments and debt.
What to do after you’ve discovered coerced debt
Your first course of action is to go online and check your consumer credit reports. Seeing what’s on your reports will allow you to assess the damage to your credit and lay the groundwork for repair.
You can access your credit reports once a year for free from all three credit reporting agencies (TransUnion, Equifax, and Experian) from annualcreditreport.com.
All debts associated with your identity, whether accurate or not, will be listed in the trade lines section of the report. You’ll also see if your partner had attempted to open lines of credit and loans by reviewing the inquiries section. So read your credit reports thoroughly and highlight anything that you don’t recognize or believe to be fraudulent.
From an expert: Ways to dispute coerced debt
According to Leslie Tayne, an attorney who specializes in consumer credit issues, your next step is to file a police report. “If you’ve been a victim of coerced debt, fill out an identity theft affidavit and bring it to your local police precinct. By law, they should give you a police report.”
Once you have that report, send a copy to the creditors that are sending erroneous information to the credit reporting agencies. “Follow up to ensure that your account is being investigated,” says Tayne. This sends a clear message that the account or debt is not yours, and you are taking action. When you take it seriously, so will they.
Be sure to formally dispute the coerced debt with the credit reporting agencies so it’s removed from your report. When doing so, keep in mind that when it comes to coerced debt, marriage status doesn’t matter.
“Whether or not you’re married to the person who’s opening credit cards in your name, it’s still considered identity theft,” says Tayne. “There are a number of federal laws, such as the Electronic Funds Transfer Act, the Fair Credit Billing Act and the Fair Credit Reporting Act that require credit card companies to investigate and reverse unauthorized transactions.”
Write a dispute letter and send it to the credit reporting agencies. It should include the following information:
Send your letter to the credit reporting agencies via certified mail, return receipt requested.
P.O. Box 7404256.
Atlanta, GA 30374-0256.
P.O. Box 9701.
Allen, TX 75013.
TransUnion Consumer Solutions
P.O. Box 2000.
Chester, PA 19022-2000.
If identity theft is involved, visit the Federal Trade Commission’s IdentityTheft.gov page, to file an identity theft report online.
The credit reporting agencies are required to investigate your dispute, and you’ll learn the results in about a month.
Do not hesitate to seek help if the creditors or credit reporting agencies don’t believe the debt is fraudulent. Make an appointment with a professional, such as an accredited, nonprofit credit counseling organization or contact a debt attorney who can help you understand your legal options.
But that’s not all you should do. Check what is being sent to you every day. “Keeping an eye on your mail is an important way to monitor whether you’re a victim of coerced debt,” says Tayne. “If you’re receiving paper mail or even emails with credit card statements from cards that you didn’t open, you may be dealing with a case of coerced debt.”
However, there are some cases of domestic abuse, where the mail is kept from the victim – resulting in fraud taking place without their knowledge. So contacting your bank or monitoring your online accounts is an effective alternative.
Immediate ways to protect your finances
Know your rights and responsibilities when it comes to dealing with coerced debt. When you’re aware, you’ll be in a better position to fight for what you deserve. You can:
Reconstructing your credit
Rebuilding credit means both removing damaging inaccuracies and adding positive information to your credit file. Here’s what you need to do:
Develop a healthy budget. So you know what you can spend without having to borrow money and acquire additional debt, create a budget you can live with. Let your income guide you. The total of your expenses should not exceed your income.
Use your existing credit products well. If you genuinely owe money, drive the debt down on your existing cards, and make all payments on time. It’s the easiest and fastest way to create a positive credit history and high scores.
Deal with collection agency debt. If you have collection accounts that are yours, they are bringing your credit scores down. They can only remain on your credit report for a total of seven years. So if they’re close to that time frame, you may want to leave them be until they age off. If you have debts that recently were sent to collections, try to negotiate the balance down to a manageable amount, and then pay them off.
Use a secured credit card in your name. Improper card usage may have put you in this predicament in the first place, so it’s normal to be apprehensive. But take heart in knowing that using a secured credit card is a safe way to start turning things around. Gather enough cash to put down as a deposit, apply for a low limit card and start charging. With regular and responsible use — on-time payments and no revolving balances – you’ll add positive data to your reports to improve your score.
Monitor statements and credit reports. Be vigilant over all of your credit card statements to make sure that there hasn’t been any more questionable activity. Checking your credit reports every few months is a healthy amount.
Build trust in yourself to rebuild your finances
It’s not only an abuse of your trust, but it’s illegal for someone to manipulate you into debt or use your financial information deceptively. Coerced debt is serious, but there is much you can do to overcome its effects. The key is to not wait to rebuild your credit. It will take time, but the results will be worth the effort.