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Is it legal for a creditor to get into my checking account and withdraw money without my consent?

Phoenix, AZ |

While living in Florida a few years ago I purchased a new motorcycle. The financing is through a national bank. After losing my job I relocated to Az. Once in Az I opened a checking account with the same bank in Az. I set my m/c payments up to be automatic withdrawal from this checking account. After losing my job I struggled and was unable to continue to make the payments. I have a 2000 Honda car payment, rent & living expenses.I went over to the bank and explained the situation. Asked them to work with me. They were not able to do this and would not allow me to refinance or lower the payments. They agreed I could leave the keys & m/c with them. At that point I was up to date on my payments. I immediately stopped the automatic withdrawal payments. A few months later I started to received phone calls from the bank asking for payments. After several harassing calls from them I stopped answering. I then received notice from them that the m/c was sold at auction and a balance of $11,000.00 was left. The following week was my biweekly pay week by my employer. I verified on-line on Thursday night my paycheck (approximately $1000.00) was auto deposited into my checking account. I had maybe a $10.00 balance in the account prior to being paid. The next morning Friday I went to the bank to make a withdrawal. I was told my account was empty. After the bank did some researching I was told the bank withdrew all my money for the loan. Is this legal???? I immediately closed the checking account. Since then I have been receiving harassing phone calls from a collection agency. I explained to them I have no other income, have no assets, no savings accounts or any other valuables. They told me they would reduce the debt to $4300.00 if I would pay them. I again told them I have no money and I am struggling to make it on my salary now. They are now saying they will be contacting an attorney to garnish my wages. They stated that there is a law in Az in which they can do this. What can I do? What can they do? Should I open another checking account somewhere else?Will they be able to get into that checking account?

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Attorney answers 2


When the creditor is your bank, the account is often subject to a contractual term called the right to a "set off." This allows the bank to take money out of your deposit account when you become delinquent on a credit account you have with them.

Most people don't realize that they are subject to this set off until it happens to them. This right is buried in the fine print and the legal mumbo jumbo when you initially open the deposit account, usually long before you obtain the credit account.

It is completely legal & very common. You will want to have your checking & savings account at a different institution than where you have a loan or credit card for just this reason.

Hope this perspective helps.


Don't put money in a bank you owe money to! By Federal law, a bank cannot go and pay itself back on a credit card, but it can for any other kind of loan. (A credit union can pay itself back for a credit card, too.)

If you have honest debts you can't pay, you should talk to a bankruptcy lawyer. That's the purpose of bankruptcy--that's why it's in the law.

It also sounds like you MIGHT have a Fair Debt Collection Violation from those debt collector calls. They cannot keep calling you if you tell them in writing to stop--or if you tell them on the phone to call your lawyer.

Some bankruptcy lawyers stay on top of Fair Debt law, too, and could help you in that area.

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