Privacy Issue When Paying Off a Spouse's Loan

Your methods should be designed to make certain that when accepting payment you do not tell the third party (spouse or not) more than he or she already knew. For example, you would require the third party to know the loan number and approximate balance before accepting payment. You could also call the borrower to confirm that the borrower was aware of the situation. Finally, you would insist that any cancelled notes or collateral releases (etc.) be mailed directly to the borrower. You want to make certain that the third party is paying off the note on behalf of the borrower and not attempting to buy it.

First published on BankersOnline.com 4/10/06