Need some opinions on this issue. We have a joint credit card account with a husband and wife. Wife contacts us to get a new card in her maiden name as they are getting a divorce. They want to leave the account open. There have been no past dues and no issues on the account, but management wants to freeze the account and require them to pay it off. I know Reg.Z and our agreement state we can close for any legal reason, but my concern is that our decision is strictly based on martial status. I understand management's concern to freeze the account and not be in the middle in case their relationship turns ugly but not sure we have a legal reason to close. Am I being overly cautious?

Official Interpretation

7(c) Action concerning existing open-end accounts.

Paragraph 1002.7(c)(1).

1. Termination coincidental with marital status change. When an account holder's marital status changes, a creditor generally may not terminate the account unless it has evidence that the account holder is now unable or unwilling to repay. But the creditor may terminate an account on which both spouses are jointly liable, even if the action coincides with a change in marital status, when one or both spouses:

i. Repudiate responsibility for future charges on the joint account.

ii. Request separate accounts in their own names.

iii. Request that the joint account be closed.

What about a case of a separation and one of the joint account holders on a HELOC asks for the line to be frozen?

Do we send two separate adverse action notices? Using "Other" borrower request?

How is a customer request adverse action?

5. Suspension of credit privileges following request by consumer. A creditor may honor a specific request by a consumer to suspend credit privileges. If the consumer later requests that the creditor reinstate credit privileges, the creditor must do so provided no other circumstance justifying a suspension exists at that time. If two or more consumers are obligated under a plan and each has the ability to take advances, the agreement may permit any of the consumers to direct the creditor not to make further advances. A creditor may require that all persons obligated under a plan request reinstatement.

So, what regulation are you quoting above?

Do we not need to ensure both borrowers are notified of the "freeze"?

Do we mail out a letter stating that we need both to respond as to the reinstatement of the line?

Paragraph 40(f)(3)(vi)

the agreement may permit any of the consumers to direct the creditor not to make further advances

You need to read your agreement to determine your responsibilities and what is allowed.

Thank you.