k man Posted October 5, 2004 Posted October 5, 2004 can trustee decline making a second loan on grounds of creditworthiness? loan program does not say so specifically but allows trustee to consider creditworthiness.
E as in ERISA Posted October 5, 2004 Posted October 5, 2004 Do you ask all applicants for a credit history and/or have their credit checked? If the policy says creditworthiness is a consideration in making the loan, then I think that means it would be a basis for denial if the credit is bad. But I think that you would need to make sure that you apply the same process to everyone.
k man Posted October 5, 2004 Author Posted October 5, 2004 i agree you must be consistant. actually the person defaulted on a prior loan. that is why is say creditworthiness is bad.
Guest Pensions in Paradise Posted October 5, 2004 Posted October 5, 2004 Why not just amend the loan policy to provide that additional loans will not be allowed if a participant previously defaulted on a loan? Then the trustee doesn't have to worry about making an arbitrary decision about creditworthiness.
k man Posted October 5, 2004 Author Posted October 5, 2004 i guess that can be done. however, the client has an aversion to amendments and additional participant notices (SMM's).
R. Butler Posted October 5, 2004 Posted October 5, 2004 I am inlcined to agree that the 2nd loan can be denied. As long as you apply the principle consistently, I don't see why you can't rely on the general "creditworthiness" provision.
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