Bank Invades Checking Account To Pay Credit Card Bill
A prospective bankruptcy client told me that Bank of America took money from his B of A bank account without notice to pay a delinquent credit card bill. The bank did not obtain a writ of garnishment, did not have a money judgment, and had not even filed suit. He wanted to know if the bank could seize his bank account without notice.
Generally, a creditor cannot get money from your bank account just because your bill is overdue until the creditor sues you and gets a judgment. It may be that the customer had a written credit card agreement with B of A for this card which gave the bank a right to take money without notice to pay past due bills. I am not familiar with terms and conditions of credit card agreements as I do not practice consumer law. If there was a written agreement to that effect the bank probably acted properly. Or, it may be the bank did something it wasn't supposed to do.
Many people who might have difficulty sometimes paying credit card debt should read credit card agreements to see what rights the credit card company has to invade bank accounts maintained at the same financial institution.
posted by Jonathan Alper, asset protection and bankruptcy attorney, Orlando, Florida
Most banks have this 'right of set-off' written into the terms of their checking and savings accounts and if they issue credit cards, in those terms too. It's not at all unusual. This is one reason why I will never take out a loan or get a credit card from the same bank with which I have my checking and savings. I have no debt to worry about, but keeping accounts separate is a practice I'm not going to abandon.
I have heard that some credit card agreements provide the issuing bank and any assignees or successors with the right to tap into any account in any financial institution.
It's usually disclosed on both sides. Regardless of what is disclosed in the credit card/loan terms, the bank always has a clause in the checking account agreement, or whatever type of deposit account (savings, CD, etc). You agreed to that when you signed the signature card at account opening.
Pay your s* on time and as agreed, and you avoid the headache altogether.
Dear Sir:
I have a writ of garnishment against me. Letters were sent to my bankers. I am a businessman and my wife is a full time employee in a hospital. When we began the business she was there on the company on paper. Later she refused to be a part of the company. If a writ of garnishment hits the business will they go behind her wages with her present employer now.
My bank recently wiped out mine & my husbands checking and savings account with no notice to a tune of $7500 for a debt they claim I guarnteed 6 years ago with my xhusband. I received one notice 6 months ago and I disputed the debt and never knew anything else until I went to use my debt card and it was declined. Not only did they wipe out our accounts, the few items that did go through they applied to our credit card as overdraft. Thoughts? This is an unbelieveable hardship. They claim this is based on set off they have right to.
I have a credit card with Bank of America and also a checking account.I have left $100.00 in the B of A account and opened a checking account in another bank with my husband. Can the Credit card Co. attach my new bank account? The credit card is in my name only.Thanks.
Bank of America and Regions Bank both did this to me and my husband. Unfortunately, and after the fact, we read the teeny tiny fine print on the cardholder agreement and you bet their right to set-off is on there however they very CONVENIENTLY don't bother to inform the consumer of this when you open the account. Mr. Alper is right - never, never keep funds in the same bank you have any type of credit with. The banks begged the Feds for help but they don't give 2 bits about their customers. Believe I have lots more horror stories than this.