Q & A Table of Contents
Now That Her Husband Is Dead, They Want Her To Pay More
From: Jeff, Flower Mound, Texas
Question: My sister's husband recently passed away at age 47.
They had two car loans through their credit union at very good rates. Now the credit union wants to close those loans and have her establish new loans in her own name. The new loans would be at considerably higher rates. The higher payments will be an enormous financial burden on her added to the emotional burden she already feels.
She is willing to continue to pay off the loans with the same monthly payments they made when her husband was alive, but the credit union insists that it is their policy to terminate the loan.
It doesn't seem right to me. My sister and her husband have been loyal customers for years but that doesn't seem to make a difference. What should she do?
Response: You need to find out what the State and Federal laws say about the right of a lending institution to terminate loans due to the death of a spouse. It is also appropriate to ask the credit union to send you a copy of the loan agreement, pinpointing where it indicates that your wife and her husband agreed that the death of either would trigger a loan termination.
It would also make sense to analyze the BATNAs (Best Alternative To a Negotiated Agreement) available to both your sister and the credit union. For example, how would the credit union feel if this situation were published in the local newspaper, circulated to local clergy, or otherwise given publicity? You and your sister should start some quick and serious research on alternative loan sources — both locally and in the broader market. In other words, if your sister and the credit union cannot reach agreement, what are her alternatives.
You may also want to find out whether the loss of her husband has had any impact on your sister’s credit rating from credit rating agencies. For example, if her financial situation has not changed significantly, one has to question the financial justification for the credit union’s proposed action — other than greed. If her income and/or assets have suffered, then perhaps the credit union is justified as viewing her as more of a credit risk.
Look at the impact of the credit union’s proposed action on all the stakeholders: your sister and her family, other members of the credit union, the credit union’s competitors, and whoever else you can think of as deriving consequences from this decision. For example, what would your Senator and Representative in the State Legislature think about this — and what action might they take.
The odds are that the legal situation is stacked against your sister — and others in similar situations. However, it is worth finding out whether this approach is applied against men who lose their wives in the same way. If men and women are treated differently, that could give your sister an interesting variety of potential choices.
Good luck with this,
Steve
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