[WSBAPT] Question about car loan going into default simply because decedent died

[msafren at jennylinglaw.com]

Hello All,

 

I had a question for fellow practitioners to see if anyone else had
encountered this or similar circumstance.   The decedent had a vehicle loan
with a local credit union and according to the credit union, the decedent's
death per the terms of the loan agreement is itself a default.  Neither the
decedent nor the estate missed payments or breached any of the other terms
of the loan agreement.  The credit union is stating that the loan is
non-assumable and by the very fact that the decedent died, the estate cannot
continue to make payments on behalf of the decedent while the estate is
administered. 

 

The fact that a person's death would cause a default on a consumer type loan
seems to me to be an unenforceable provision as it would be void for public
policy. Garn-St. Germain Act on the federal level prevents these types of
defaults with mortgages, but I'm unfamiliar with state or federal laws,
which would prevent a death cause a default in a vehicle loan - Does anyone
know if there are any such laws or statutes? 

 

If there is no such statute - is there any case law that anyone is aware of
where a loan provision whereby a person's death in vehicle or consumer loan
would cause a default would be unenforceable due to public policy or
unconscionability? 

 

Any input or advice would be greatly appreciated.

 

Thank you in advance!!

 

Kind regards, 

Michael S. Safren, Esq. 
Attorney at Law 

 
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