What to do if when a credit card was opened in a business name without permission and then goes into default?

UPDATED: Jan 2, 2011

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What to do if when a credit card was opened in a business name without permission and then goes into default?

My brother managed a business for me, in a different state from where I live and work. He opened a credit card in the business name, with out my knowledge or approval. I didn’t find out about the credit card until I received a collections call from the credit card company, at my home, long after the business had closed. I advised the credit card collections dept that I never opened an account with them and asked for the original application as well as all statements. The only thing that I received was the court subpoena. I requested the above information from the credit card company attorney and was declined.

Asked on January 2, 2011 under Bankruptcy Law, Arizona


M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 12 years ago | Contributor

I am sorry for your situation.  First, about your brother.  If you gave him the power to manage the business - a general power to do so - then it could be viewed that he opened the card with authority as an agent of the business. Now, what you would have to prove here against HIM is that the purchases were not for the benefit of the business but his personally, which would be proving stealing or a form of embezzlement against him.  That you need to think about and consult with an attorney about.  As for your being denied the information you requested, that was improper.  Write the attorney - who could get in to a lot of trouble if he does not provide this - and request "validation of the debt."  This includes a copy of the original contract that opened up the agreement, the statements from the beginning until the end and proof that they have the proper nexus to sue: an assignment of the debt from the original credit card company.  Ask for copies off al checks paid to them as well.  See if he used company funds.  Good luck.

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