Debt from deceased father on joint account

[zender]

My father-in-law passed away 18 months ago. He had opened a CU (credit union) account with my wife 20 years ago to help her build credit while in college and used that account for school loans, which were paid off long ago. He also had other accounts in his name only. After a stroke, which eventually led to his death, his other individual personal accounts became delinquent and the CU started transferring penalties and charges to the old joint account. Last week, we were contacted for the first time by the CU asking us to pay over $7k in charges to this account and threatening to report us for bad debt despite our absolutely flawless credit rating (we are VERY vigilant).

My question is, even if the CU has a right to move debt to non-delinquent accounts, do they have a right to transfer debt from his individual accounts to the joint account, thus making his surviving daughter liable for the debt. On top of that, wouldn't us agreeing to pay even a portion of that debt, allow them to transfer the remainder of any personal debt at the CU to this account, thus making us liable for ALL of his debt with the credit union?

Any advice would be of great help to us. We are somewhat devastated at this news.

 

[mightymoose]

I don't see how they can make you pay for his personal debt.
You should not pay or agree to pay any portion of the debt.

Have you informed the credit union of his death and provided evidence?
When he died who handled his personal affairs?

 

[zender]

My brother-in-law was the executor and yes, the CU was informed within a week or so of his death and presented with a death certificate. We were told at the time that the accounts would be 'written off'. What they did not tell us is that 'written-off' meant that they would just figure out later what to do about the debt. The issue is, the debt on this account accumulated while he was ill, and not after his death (to be confirmed).

We definitely have not agreed to pay it but, they are still insisting that we are liable b/c he gave permission (via his standard account agreement) to allow them to move delinquent account debt into whatever active account he may have. They chose the joint account (of course) without our knowledge. Truthfully, we were under the (incorrect) impression this account was closed 15 years ago, a few years after I married his daughter. Not a very nice surprise.

My worry is that they will ruin our hard-fought-for credit rating for years over this. I just don't know what our rights are when it comes to this matter and what banking rules/laws should apply that we can assert. Of course if sounds ridiculous to think we'd owe this but stranger things have happened in banking, I'm sure.

 

[disagreeable]

What was the balance of the joint account at the time of his death? You can make the argument only half the money in the account was his. Unless you can prove he never deposited anything in there. You also need to refer to the contract signed when the account was opened to see if it supersedes these arguments.

 

[guestpost]

We've asked for and they are sending the contract docs for the account. It's possible that the $7k was just the penalties/fees charged on his other accounts from the beginning of his illness, when he started having trouble with payments, until his passing. I still think it's a pretty shaky action for them to take since the debt is 100% his and they transferred it to an account making it the (probable) responsibility of another person. I'll review the contract as well as confirm that they had permission to do such a thing as charge penalties and fees on another credit account and place it onto a joint account. I believe they have to have permission but that may be part of the overall credit union agreement. I'm definitely going to make them prove it, I just don't have any law to cite so it's more difficult for us to fight (although I'll keep at it). If we run out of arguments based on the contract, we'll probably get an attorney involved just to make sure we're truly out of legal arguments.

Actions:
1. Get the contract and see if she is a signatory and liable for the account balance
2. See if the credit union was authorized via general agreement or by specific signed agreement to transfer penalties to this account
3. Consult an attorney if the agreement looks like we are probably the hook (just to make sure).

If anyone can think of anything else we should confirm, we're certainly open to advice. Especially any banking laws that might pertain to this situation(!).

Thanks again to all.

 

[zender]

We've asked for and they are sending the contract docs for the account. It's possible that the $7k balance due was just the penalties/fees charged on his other accounts from the beginning of his illness, when he started having trouble with payments, until his passing. I still think it's a pretty shaky action for them to take since the debt is 100% his and they transferred it to an account making it the (probable) responsibility of another person. I'll review the contract as well as confirm that they had permission to do such a thing as charge penalties and fees on another credit account and place it onto a joint account. I believe they have to have permission but that may be part of the overall credit union agreement. I'm definitely going to make them prove it, I just don't have any law to cite so it's more difficult for us to fight (although I'll keep at it). If we run out of arguments based on the contract, we'll probably get an attorney involved just to make sure we're truly out of legal arguments.

Actions:
1. Get the contract and see if she is a signatory and liable for the account balance
2. See if the credit union was authorized via general agreement or by specific signed agreement to transfer penalties to this account
3. Consult an attorney if the agreement looks like we are probably the hook (just to make sure).

If anyone can think of anything else we should confirm, we're certainly open to advice. Especially any banking laws that might pertain to this situation(!).

Thanks again to all.