Divorced partner refused to help repay joint line of credit

The client and his now ex-wife had a joint unsecured line of credit with $8,800 owing when their marriage ended. Neither was willing to make any payments on the line. Before long, the bank's collection centre contacted the client. He told them to contact his ex-wife and said that he would not be making any payments.

Two months later, the client's exwife paid about 50 per cent of the outstanding balance and the bank removed her name from the line of credit. A few months after, the collection centre contacted the client to collect the balance. At that time, the client learned that his ex-wife had reached a settlement with the bank and her name had been removed from the line. He complained that the bank had favoured his ex-wife in their dispute.

In the client's opinion, the bank chose sides in their dispute and chose an arbitrary amount for which his ex-wife should be responsible. He also felt the bank should have informed him of the terms of his ex-wife's settlement. The bank argued that when the collection centre contacted the client and he refused to make any payments, it attempted to limit its losses by collecting a partial payment from the ex-wife. The bank also argued that it is entitled to collect 100 per cent of the joint debt owed from either party as stated in the bank's Personal Credit Agreement.

OBSI's investigation focused on whether the client suffered financial harm as a result of the bank's action. We found that, given the client's repeated refusal to make repayment arrangements, the bank acted reasonably when it approached the ex-wife for payment and accepted her payment of 50 per cent in settlement of her obligation under the debt.

The bank did acknowledge that it made an error when her name was removed from the line of credit. However, while we found the bank's treatment of the ex-wife's responsibility for repayment unusual, we could find no direct financial loss suffered by the client as a result. The client still owed the bank the balance of the line. We therefore made no recommendation for compensation for financial loss.

However, OBSI concluded that the bank's error had a non-financial impact on the client, causing him inconvenience. OBSI recommended that the bank pay him $250 in compensation.

(2007)