What to do when Your Spouse Forges Your Name on a Loan Application.

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What do I do if my spouse forges my name on a credit card or loan application, without my knowledge or consent, and racks up a huge debt?

I am writing this article because I have found that this question comes up quite a bit when I talk to clients.

Texas is a community property state. This means, with exception, that all assets and liabilities acquired by either spouse during marriage belong to the marital community. However, if your spouse forges your name on a credit card application or other unsecured loan application, there are remedies available to you.

First, you need to contact the lender to let them know that your spouse forged your name on the application. If your spouse sent the application via mail or fax, then the lender had a duty to verify the applicant and the applicant's signature were genuine. The lender may balk at transferring the debt from you to your spouse. In that case, I would recommend you retain an attorney to file suit against the lender for its negligence. The lender will likely bring your spouse into the suit as a cross-party defendant. All of this gets a bit tricky, which is why I recommend you retain an attorney should the lender not release you from liability on the debt.

Second, you may have an action against your spouse during the divorce lawsuit under the doctrine "fraud on the spouse." Typically, after divorce, the rights of preexisting creditors are not affected. This means, even if the divorce decree gives one spouse responsibility to pay a debt, if that spouse defaults on payment, the creditor still has a cause of action for collection against the borrower of the loan. Therefore, if the above-mentioned unsecured loan has not been corrected or if it is still pending (in litigation, etc.), you are the liable party as the "borrower."

That said, in your divorce petition and during your divorce proceeding, you should assert the "fraud on the spouse" doctrine. Fraud on the spouse or community can be through actual fraud or constructive fraud. Constructive fraud is when one spouse disposes of the other spouse's interest in community property without the others knowledge or consent. Actual fraud exists when a spouse not only deprives the community of assets to the detriment of the other spouse, but may have done so with dishonesty of purpose or intent to deceive. If constructive fraud is shown, then the party alleging it need not show actual fraud, which is more difficult to prove.

This would be the case with the credit card monies, or any other assets your spouse disposed of unreasonably or via gifts to others. If this happened shortly before your spouse left, then you have a good argument. The court may not make your spouse pay you back, but it may weigh more of the community assets in your favor during the just and right property division.

These matters can become very complex, and in the event that you are unsure or uncertain you should consider seeking legal advice.

T.D. Lewis of T.D. Lewis Law Firm, PLLC
Dallas & Collin County, Texas
Tel: (972)455-2810
Toll Free: (877)469-5997
https://www.lewisjustice.com