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Re: Adverse Action Notice/Bankruptcy

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#2813
jholzknecht
Keymaster

The answer provided by JGo9 is accurate and here’s why.

The definition of “adverse action” includes a termination of an account or an unfavorable change in the terms of an account that does not affect all or substantially all of a class of the creditor’s accounts.So, your action appears to be adverse action. But excluded from the definition of adverse action is any action or forbearance relating to an account taken in connection with inactivity, default, or delinquency as to that account. So, assuming your bankrupt borrower is in default, no adverse action notice is required.

Generally Regulation Z requires advanced notice if the credit limit is decreased.