Know somone who had just passed; his account immediately went to collection agency

[joshuagraham]

It was an account that he & his now widow were using. The CC doesn't even want to deal with the widow at all (they had paid everything in full every month), and has passed on the account to a collection agency - and the collection agency doesn't want to answer any questions, only saying "we'll send you your information request in "6 weeks". I instructed the widow to send an e-mail to the bank executives demanding to get information on the account in a reasonable amount of time; she will be more than happy to pay off everything in full once she sees the amount of the balance and the charges (evidently, she was using the account after his passing, not knowing that it should have been closed). She got a canned response from the CC executives that they would address with within 2 weeks. Something tells me that for whatever reason, this CC will be a33es when it goes to having some of his assets go through probate succession (community property state).

[justbroke]

Well, I can't get into the law itself, as States vary, but the cardmember agreement could have an "automatic default upon death" clause. That would put the account into default regardless of any joint cardholder status. In particular, some credit unions (CUs) have a clause that upon death of an account holder, the account is immediately terminated and due. From what I can gather, that is essentially a due on death clause which gives rise to a default.

Now, as to how this particular financial institution is handling the provisions in their lending documents, will be the key to determining whether or not they made any procedural mistake. The other question is could a note (credit debt) be defaulted for any reason, or must it be something akin to bankruptcy, missed payments, fraud, death, or other acts covered by the cardmember agreement..

Personally, I would wait to see what the financial institution has to say. As I wrote they may just reference a "default upon death" clause in their cardmember agreement.

Too much to speculate at this point without clear reasoning or formal notice from the issuer / member bank / financial institution.

[joshuagraham]

Well, I can't get into the law itself, as States vary, but the cardmember agreement could have an "automatic default upon death" clause. That would put the account into default regardless of any joint cardholder status. In particular, some credit unions (CUs) have a clause that upon death of an account holder, the account is immediately terminated and due. From what I can gather, that is essentially a due on death clause which gives rise to a default.

Now, as to how this particular financial institution is handling the provisions in their lending documents, will be the key to determining whether or not they made any procedural mistake. The other question is could a note (credit debt) be defaulted for any reason, or must it be something akin to bankruptcy, missed payments, fraud, death, or other acts covered by the cardmember agreement..

Personally, I would wait to see what the financial institution has to say. As I wrote they may just reference a "default upon death" clause in their cardmember agreement.

Too much to speculate at this point without clear reasoning or formal notice from the issuer / member bank / financial institution.

I have another thread concerning this (with updated info) in different subforum.