Reading Time: 3 minutes

Banks Can Mess Up

When this consumer died, the bank got angry she was missing payments. So, they threatened to repossess her car.

In yet another real-life experience that just goes to show how banks can and do mess up, this courtroom drama left the judge shaking their head.

 

She Stopped Paying

If you die, you are likely to miss a payment or two.

It is one of the few financial truths we can all agree on. Sadly, it seems that not everyone in the credit world seems to take this into account.

That is how a routine car loan turned into a High Court matter where a bank genuinely tried to repossess a vehicle from someone who had already passed away because she was rude enough to stop paying.

Yes, really.

The consumer in this case kept every instalment perfectly up to date until her sudden passing in early 2024.

The first missed payment only happened the following month, for what most of us would consider a fairly reasonable reason: they were no longer alive.

But automated bank computer systems are not known for compassion or curiosity, so the default notification kicked in as usual. 

By August, the bank’s normal collections machine had rolled on far enough for the bank to issue a summons threatening repossession.

Unfortunately, those documents were sent to an address the consumer no longer lived at, which meant no one received anything, and the bank remained blissfully unaware that the account holder had left this world entirely.

When the matter finally landed before a judge, the consumer’s elderly parents came to explain what had really happened.

They were not being sued. They were not part of the contract. They just showed up to help reality catch up with the paperwork. Imagine having to take time off just to tell a courtroom, “The reason the payment stopped is because our child passed away.”

You can imagine the silence that fell over the court.

Here is the part that makes the situation even more sad.

Many credit agreements in South Africa include credit life insurance built into the monthly instalment.

This insurance is designed to settle the remaining balance if the consumer dies, becomes disabled, or is retrenched. In other words, the whole point of credit life insurance is to make sure families are not left scrambling and that banks do not need to chase ghosts for repayments.

‘the insurance should have stepped in long before anyone reached …court’

In a case like this, the insurance should have stepped in long before anyone reached for court papers.

The bank’s attorney at this point in the case told the court he had no idea the consumer had died, which the judge accepted.

This seemed pretty obvious given that all correspondence had been going to the wrong house. Even had it gone to the right address, it’s hard to update your details from beyond the grave.

The court reminded everyone (especially the bank) that when someone dies, their legal personality ends. They cannot be sued. They cannot “default.” They certainly cannot attend court. They cannot be ordered to hand over a car. Any action must be taken against the deceased estate, handled by an executor.

And, as a legal note, a missed payment after death is not a breach of contract. It is simply…death. Final, sadly unavoidable.

In the end, the court struck the application from the roll and the bank left red faced. 

The System Has Its Flaws

When a bank or other credit provider starts to chase you for payment when, let’s say, you have entered debt review or have been in debt review for a while, it can feel like maybe something is wrong with your debt review.

But it is good to remember that banks and their collections department computers can and do make mistakes.

it is good to remember that banks and their collections department computers can … make mistakes.

Even the biggest institutions sometimes operate on autopilot and get stuff totally wrong. They may not realise or take notice when you tell them you are in debt review, or even if you are totally dead, it seems.

Also, its good to know that if you are dead, you are totally not expected to make payments on your car the next month. It turns out that this is a very good reason to miss payments.