Right of Offset

I have a credit card with the same bank that I save money, can they debit my account if I am late on the credit card?

If I have multiple accounts with a bank that have funds in them and I have an auto loan with the same institution and i have just gone late on my first payment. Can the bank automatically deduct the payment from one of my accounts? and if so, how soon can they take action?

Read full question
Bill's Answer
4.0
/5.0
(7 Votes)
Bills.com Team
Pro

By

Highlights


  • Understand that federal law regulates a bank's right to offset.
  • Be aware that the laws may vary for Credit Unions.
  • Consult with an attorney, to find out your state's laws about the right of offset.

Federal law limits how banks can use funds in a consumer's deposit account to pay a delinquent debt with the same bank. In many cases, a bank can withdraw funds held in a consumer's checking, savings, or investment account, to pay any delinquency which has accrued on secured debts owed by the same creditor. A bank’s ability to take such action is referred to as the "right of offset."

Federal law restricts the application of the right of offset, preventing federally chartered banks (such as Bank of America, Wells Fargo, etc.) from using the right of offset to collect of delinquent revolving debts, such as credit cards. However, since the loan in question is an auto loan, it is quite possible that the bank has every right to withdraw funds from your deposit accounts to bring your loan current.

Review your auto loan contract and deposit account agreements, as these documents should outline the bank's right of offset in case of delinquency on your secured loan. To read more about banks' right of offset for various types of debt, see the Office of the Comptroller of the Currency's document Answers About the Right of Offset.

Smaller financial institutions, such as credit unions and state chartered banks, often have much more freedom in offsetting delinquent debts against a consumer’s deposit accounts. Unlike national banks, which are chartered by the Office of the Comptroller of Currency, credit unions and state chartered banks are regulated under various state and federal laws, many of which do allow for the offset of deposit accounts for payment of delinquent unsecured debts, such as credit cards.

Even federal credit unions, which are chartered and regulated by the National Credit Union Association, have much more freedom to offset customer debts than national banking associations. Because of the various laws regulating state chartered banks and credit unions, you may wish to consult with an attorney licensed in your state to discuss your state's laws regarding a creditor's right to offset.

Recommendation

Since you are only one month behind on your auto note, the easiest was to prevent any further collection activity by the lender, including possible offset against other accounts, would be to pay the debt. If you cannot afford to bring the loan current in a single payment, the lender may be willing to work with you in establishing an affordable repayment plan.

I hope this information helps you Find. Learn & Save.

Best,

Bill

Bills.com

53 Comments

Recent Best
1500 characters remaining
  • 35x35
    Jan, 2012
    Mark
    I'll try to make this short, yet complete... My ex-wife had an account at a Fed credit union, in California. Daughter started a "joint" account at age 14, in 2006. Daughter got a job, and put her wages into that account. Ex-wife failed to make payments on her checking "Overdraft" account. In 2009, credit union took $4300 from daughter's account, to pay toward ex-wife's Overdraft account. Is that legal? Thanks Very Much for your advice, here. Mark
    0 Votes

    • 35x35
      Jan, 2012
      Bill
      Your story explains the perils of joint accounts in painful detail. If your daughter's mother signed a contract with the credit union that allows offset, I do not believe your daughter has any recourse to recover the money from the credit union.
      0 Votes

    • 35x35
      Jan, 2012
      Mark
      Darn. Thanks, though, for the reply. I was hoping that Federal law supercedes the contract fine print, in that the $4300 never belonged to the ex-wife. Daughter's wages were the Source of the funds in that Joint account. That's irrelevant? Thanks, again.
      0 Votes

    • 35x35
      Feb, 2012
      Steve
      Hi Mark, I might be wrong, but if your ex-wife was the only account holder on the overdrawn account, the CU didn't have the right to offset. The only way a CU can exercise the right to offset is if both account titles match. You can't exercise the right of offset on which an account has one sole owner from an account that includes joint ownership. What credit union was this if you don't mind me asking? I used to work for Valley Credit Union and Commonwealth Credit Union in San Jose before moving to Temecula. You might want to contact the NCUA regarding this.
      0 Votes

    • 35x35
      Feb, 2012
      Mark
      Thanks for that opinion, Steve. Ex-wife was sole-owner of her account, and Daughter was a minor when opening her account, thereby requiring Ex-wife as a joint-owner. So, if you're correct, we'll recover the funds! Cool! At the time, it was Orange County Teachers FCU, since renamed to Schools First FCU. I do have NCUA contact info at the ready, but I haven't even approached the CU yet, trying to recover the funds. For now, I'm just "planning the attack". Do ya' happen to know where that statute/law that you referred to is? Thanks.
      0 Votes

    • 35x35
      May, 2012
      David
      Hey Mark J, I have the EXACT situation going on right now except I'm the son, and the bank took over $15,000 of my money to pay off my mom's debt. Mom opened my account when I was 16 and I have used it for the past 10 years and she has never touched it since. I'm not sure if you've gotten this case resolved but maybe we can learn a few things from each other and recover our funds. Please post a reply, so we can see if a back-and-forth will help us.
      0 Votes

  • 35x35
    Nov, 2011
    Tim
    Is there a statute of limitations around fighting a bank who used the "right to offset"? I was the victim of a Ponzi scheme a couple years ago and Chase emptied my account on the basis that at some point in the past the account holder of the Ponzi scheme had kited some checks leaving Chase with an account in deep over draw territory. I would like to file suit against Chase but am unsure if its too late. Also this happened in CO and I now live in CA.. Does that matter? Thanks for your help Bill.!
    0 Votes

    • 35x35
      Nov, 2011
      Bill
      Consult with a lawyer in CO who deals in commercial litigation, who will be able to deal with the specifics of your case.
      0 Votes

  • 35x35
    Oct, 2011
    dan
    If I am delinquent on an unsecured debt (credit card to Capital One), and Cap One buys an institution in which I have an account that holds stocks, can they sieze the stocks?
    0 Votes

    • 35x35
      Oct, 2011
      Bill
      Review the cardholder agreement you signed with the credit card issuer. Look for a section called "Right of Offset." If Capital One included language that gives it the right to offset a debt on a credit card with the cardholder's other accounts, then there is your answer. If there is no right of offset spelled out in the contract, then it may not touch your separate account.
      1 Votes

    • 35x35
      Feb, 2012
      David
      Am wondering, what if the bank (Cap One) has sold the debt? What happens to right to offset at that point? Does it transfer over?
      0 Votes

    • 35x35
      Feb, 2012
      Bill
      My first reaction to your question is the answer is "no," but my second reaction is it would depend on how the right of offset was written in the contract you and Capital One signed. Review your contract for the most certain answer.
      0 Votes

  • 35x35
    Sep, 2011
    Michelle
    I apologize in advance for the length of this post... I filed for chapter 13 bankruptcy in July. I had two car loans through our bank which is a credit union. We included our car loans in our repayment schedule through the trustee. In August the bank took an automatic payment for both cars and had to return it because of the automatic stay. We contacted the bank and the risk department instructed us that no further transactions would be honored on our checking account and that we needed to go to the branch and withdraw our funds and close our account. An automatic deposit was scheduled to hit our account the next day. They agreed to allow this one deposit but made it clear that no other transactions - deposits,outstanding debit card transactions, or checks - would be honored. When we went to the bank on Aug. 17th, withdrew the funds, and closed the checking account. We were told that we could not close the savings account because of the two car loans and that we had to leave funds in the savings account to keep it open. On Sept. 9 the bank accepted an electronic deposit sent to the closed checking account and put the funds into the savings account. Then on Sept. 28 they took the entire savings balance and applied it to the car loans. I called the risk management office again and they agreed to give us back the deposit but said the other funds were pre-pettition funds and so they would not return them to us. They also said that now we would need to go to the branch and take out the amount they returned and close the savings account. Can they do this? We would have closed the account in August but they wouldn't let us. Can they take these funds even though we are already paying the car loans through the payment plan? Thanks for your help.
    0 Votes

    • 35x35
      Oct, 2011
      Bill
      Consult with your bankruptcy lawyer to learn if your credit union violated federal bankruptcy laws. If the chain of events you described is accurate, I believe it did, but again, your lawyer will be able to see documents you provide, and can offer a more precise opinion.
      0 Votes

  • 35x35
    Sep, 2011
    Diane
    Question if Joe & Jill have joint checking account and Lisa & Joe have a joint checking both at the same bank. and Joe and Jills account overdraws- can the bank take money from Lisa and Joes account to offset Joe's other account being overdrawn... even if Lisa doesn't have anything to do with and doesn't even know about the other accoutn until she sees the withdrawl taken without notification?
    0 Votes

    • 35x35
      Sep, 2011
      Bill
      Joint accounts create more problems than they solve, as your anecdote illustrates vividly. I recommend people open separate accounts at the same bank or credit union, and then use that institution's online banking tool and balance transfer feature to move funds between accounts as necessary.

      Back to your question: Review the contract you signed with the bank or credit union when you opened the accounts. Some institutions give themselves the right of offset that you described.
      0 Votes

  • 35x35
    Aug, 2011
    Chelsa
    I would like to know the terms of the Banks "right to Offset". I have an installment loan with the same bank as my two checking accounts. I have used this bank for all of my financial needs, loans, checking, etc. My loan is now past the grace period, but not past 30 days, and the payment was taken from my checking account. I have never been past 30 days on any of my loans with this bank nor has this situation ever happened before. Can the bank offset my checking, even if my loan is not yet 30 days past due?
    0 Votes

    • 35x35
      Aug, 2011
      Bill
      What your bank can do depends on the language of your agreement with the bank. It is doubtful that you read all the fine print when you opened your accounts, but the answer to your question lies there. It may be the case that the terms of your installment loan specified that the action the bank took is permissible.

      As the article mentioned, there is additional information about the right of offset at the Office of the Comptroller of Currency's Web site that you can locate by using the link in the article.
      0 Votes

  • 35x35
    Apr, 2011
    Abdul
    In searching the internet I am getting conflicting information on what constitutes "credit card plan" as it relates to limitations on federally chartered bank's right of offset. Is a line of credit set up as overdraft protection for a checking account considered a "credit card plan" and is subject to limitation on bank's right of offset. Thanks.
    0 Votes

    • 35x35
      Apr, 2011
      Bill
      I suspect you see conflicting information because each credit card issuer sets up their overdraft plans differently. Review the contract you signed with your credit card issuer for the card to learn if the overdraft plan is contemplated, and if so, its terms and conditions. My guess — note that word choice — is the overdraft plan is a separate contract that is not a part of the original credit card contract.
      0 Votes

    • 35x35
      Apr, 2011
      Abdul
      Thanks for the quick response. I believe you misunderstood the question. I have the account set up as a Line of Credit and I was given a checkbook and no credit card. The Line of Credit is also linked to a checking account. So I can draw on this line of credit by ether writing a check against the line of credit or writing a check against my checking account creating an overdraft. Some articles that I read on the internet state that this kind of an open ended account falls under the defination of "credit card plans" which is also an open ended line of credit account. Some articles so no that the offset restriction applies strictly to a credit card even though the regulation states "credit card plans". This is where my confusion is as to who is correct. Thanks.
      0 Votes

    • 35x35
      Apr, 2011
      Bill
      Take your line of credit contract to a lawyer in your state who has experience in securities law or consumer law. I can understand that if you stand far enough away from a line of credit it looks like a credit card, but the mechanics of how the transaction occurs are different legally. A check is a negotiable instrument that is covered by laws that are separate from credit card laws, for example. Lines of credit precede credit cards by a hundred years or more, and are discussed in many state statutes. Credit cards are a much more recent invention, and are not even mentioned in most state laws. I could go on but you get the point: Let a lawyer in your state review your contract.
      0 Votes

  • 35x35
    Mar, 2011
    PM
    I own a house that is currently in foreclosure. The house has a loan from Wells Fargo for $216,000 and another home equity line from Wells Fargo as well for $55,000. I believe Wells Fargo sold the Home equity line to a credit company a few months ago. Two days ago, Wells Fargo charged a joint account that I have with my mother (I am the primary on the account) for $12,000. Is this legal? This money was all I had left to survive and I have not had a real job in over a year. I don't know what to do at this point, I have no living money and since my credit has deteriorated because of the foreclosure, I have no credit cards. Please guide me in the right direction. I really appreciate the assistance. Thank you, PM
    0 Votes

    • 35x35
      Mar, 2011
      Bill
      Joint accounts create more problems than they solve, as your anecdote illustrates painfully. Accordingly, I advise readers to avoid joint accounts of all types. If two (or more) people need to exchange money, I suggest they open separate accounts at the same credit union or bank and set up that institution's mechanism for making transfers between accounts.

      Regarding your question, review the loan contract you signed with Wells Fargo for the HEL. Does it explain Wells Fargo reserves the right of offset? If so, you have no recourse against Wells Fargo. If not, take your contract to a lawyer who has experience in consumer law. If you cannot afford an attorney, call your county bar association and ask for the name of the organization in your area that offer no-cost legal services to people with no or low income. Make an appointment with that organization and bring all of the documents you have regarding the mortgage and HEL to your meeting. The lawyer you meet will review your documents and advise you accordingly.
      0 Votes

  • 35x35
    Mar, 2011
    Pat
    My issue revolves around Suncoast Schools Federal Credit Union - based in Florida where I have a 2nd mortgage that is in dispute. My MOTHER also has an account at Suncoast for her Long Term Care Insurance, a few CD's etc... not her primary account, but I am a signer on the account, since she is elderly. She received a letter yesterday that indicated her accounts had been wiped out (over $8,000! ALL of her savings) based on their "Right of Offset" to transfer funds from her account to an account on which your joint owner is primary or joint owner. They did not specify WHICH loan. Aren't many children signers on their parents accounts in case they become incapacitated? Do you know that by being so - you place your elderly parent at risk???? Is this LEGAL? How can it be so? I now owe my MOTHER $8,000+ that Suncoast Schools Federal Credit Union STOLE from her! Obviously, I have no way to reimburse her (having been unemployed for 2 years now), and this will cause her long term care insurance to lapse.
    0 Votes

  • 35x35
    Feb, 2011
    Daniel
    I live in Texas and had two Chase checking accounts. My employer bounced a check on me causing a debit balance in one account. I told Chase I would have it paid in about a month. The debit balance was approximately $110. About 4 weeks later, after I'd scheduled several bills to be paid, Chase did an offset to the account with the credit balance, causing over $300 in NSF Fees. When their offset amount showed up on my statement, it was backdated to the day before I issued the on line payments. Also note that their system will not allow you to schedule payments if the funds are not in the account. I am now blacklisted from getting a checking account because of this. I received no notice that they were going to offset an account, and had the entry not been backdated, the account would still have had a credit balance with the debit balance account being paid in full. My questions are: 1. Was this legal? 2. Where can I find the statutes governing offsets? 3. Are there specific circumstances involving offsets that are designated by law as bad faith transactions? Thanks Bill!
    0 Votes

    • 35x35
      Feb, 2011
      Bill
      JP Morgan Chase is a national bank, and is not supervised, licensed, or registered by the Texas Department of Banking. The Federal Reserve Board (FRB) oversees some aspects of banking. In July 2010, the FRB set new rules for new overdraft rules for checking accounts and ATM cards. See the FRB page All Regulations and select Regulation E. To register a complaint for a national bank, go to the Federal Reserve How to File a Consumer Complaint About a Bank page.
      0 Votes

    • 35x35
      Mar, 2011
      Judy
      For credit unions in the state of California and subject to the credit union's internal policies, I was under the impression that on a delinquent real estate loan, one right of offset (or one action) is allowed. I also understood that credit card right of offset was only allowed if the member had signed a specific pledge of shares for the credit card account. I was also under the impression that the right of offset could be used multiple times on non-real estate consumer loans (excluding credit cards as stated above). Is this correct? Thank You for your response.
      0 Votes

    • 35x35
      Mar, 2011
      Bill
      The devil is in the details, Judy. In your case, the terms of your account agreement with your credit union, as well as the laws in California, will determine which of your accounts the credit union can come after for a delinquent mortgage loan. I recommend that you speak with an attorney who is experienced with contract law.
      0 Votes

    • 35x35
      Mar, 2011
      Judy
      Hi Bill, Thanks foir the response. I know that there is only one fight of action on real estate loans. But for unsecured loans and lines of credit and auto loans, our Agreement states that members pledge all shares (eligible under the law)for all loans (we have a cross-collateral clause as well). It does not state that we shares may only be transferred one time over the course of the loan. I believe we are allowed to transfer shares any time the loan is delinquent throughout its life and that is what I am trying to get an answer on. Thanks!
      0 Votes

  • 35x35
    Jan, 2011
    kimberly
    I checked my Rabobank checking account and noticed that my husbands Chase credit card company pulled out $200.00 without our authorization, can they legally do this? And if not what can I do about it? I dont want my money back because I planned on paying them anyways,its just the fact that they took it without permission!
    0 Votes

    • 35x35
      Jan, 2011
      Bill
      Your question stumps me. The right of offset applies to accounts within a bank. Rabobank is collective of 143 banks in the Netherlands and is independent of JPMorganChase, which is a USA bank. I am unaware of any offset ability between different banks. Take your credit card agreement to a lawyer in your state who has experience in contract law or consumer law to learn if your credit card agreement gives Chase a right of offset in another bank.
      0 Votes

  • 35x35
    Dec, 2010
    Chazz
    Our bank off set with out a loan in place. We had a third party ask us to let them secure a loan with a CD. After the CD matured, we were under the impression we could cash it out. The bank, which had an agreement with the third party, willingly cash out the CD. The third party forced the bank to pay the amount to them. Later, the bank off set and wiped out a business account, reversing all cleared checks and card transactions, and closed the account. What can be bone to at least allow the vendors and employees be paid?
    0 Votes

    • 35x35
      Dec, 2010
      If I understand your question correctly, you secured a business loan with a personal CD, which you liquidated upon maturity. You did not repay the loan, and the bank responded to the secured creditor's demand for funds by freezing or seizing your business accounts. You are asking if the seizing or freezing can be unwound. Consult with an attorney in your state who has experience in contract law immediately (now, this minute, today) about this matter. Time is of the essence.
      0 Votes

  • 35x35
    Dec, 2010
    Sally
    I am so pissed, it's Christmas and Suntrust recovery dept took the last bit of money I had. I told the *^%#!I was going to pay debt weekly,and she still took the money that was there. I am also tired and pissed with the freaking government, particularly federal. How is it, they have the right to offset an account and go into it and TAKE what they want. I really like to go to the Whitehouse and say a few things.
    0 Votes

  • 35x35
    Nov, 2010
    Ester
    In a banks right to offset a loan can that bank take more than the amount to bring the account up-to-date? For instance, I can no longer make payments and the property is in the process of foreclosure which will be final in Feb. of 2011, the bank has basically wiped me out of several thousands, I was only delinquent one and a half grand. Can they take that much?
    0 Votes

    • 35x35
      Nov, 2010
      Bill
      It is difficult to answer your question without knowing more about the circumstances surrounding the facts presented. Review your mortgage loan document to learn more about the rights the bank reserved regarding offset. For a more precise answer, bring your mortgage loan contract and the offset documents to an attorney in your state.
      0 Votes

  • 35x35
    Nov, 2010
    scott
    Bank of America has a loan on a commercial shopping center. The loan is in default. BOA wants to sell the note and mortgage ( the paper ) and avoid having to foreclose, take the property back and manage the property, etc. There is an escrow account with BOA that has collected money for taxes, insurance, etc. BOA wants to keep that money and off set their loss, and sell the "bare" note and mortgage. Can BOA transfer (take)the money from the escrow account on this property and do this? Isn't the escrow account "tied" to the note and mortgage, and subsequently part of the purchase/transfer of the paper?
    0 Votes

    • 35x35
      Nov, 2010
      Bill
      The answers to your questions can be found in your state's statutes and case law. Consult with an attorney in your state who has experience in commercial real estate and ask him or her your questions.
      0 Votes

  • 35x35
    Oct, 2010
    Bill
    Do you have any evidence to prove you intended to close the account? Any e-mail, notes, or letters to or from the bank establishing that fact? If so, move up the chain of command at the bank with that evidence to show it screwed up. Ask them if losing your business and goodwill is worth $600, especially over charges it invented. If your business is incorporated and the corporation opened the account, what the bank did was illegal. If you opened the account using your Social Security number and name, I do not see a problem if, as the CSR stated, your contract with the bank gave it the right of offset. I am not aware of any rule or law that requires banks to give customers any notice before exercising the right of offset.
    0 Votes

  • 35x35
    Oct, 2010
    LParks
    I had an old personal checking account with my local, state-chartered bank in 2003. I closed the account and opened another account with another bank because I relocated to a different area of the city. The first bank apparently never actually closed the account, and it kept accruing monthly bank fees, NSF fees because I wasn't making any deposits to it anymroe, to a total of nearly $600. Two months ago, I opened a new BUSINESS account with the orignal bank I had back in 2003. My business account is used for my client's money, as I am a wedding and event planner, and I draw from this account as my clients' vendors need to be paid. Yesterday, I checked my balance with the bank because I was about to pay some vendors for my 10/16 wedding, and I'm $600 short!! I called and spoke with Custemer Service, and the girl informed me that the bank exercised its right to offset my brand new business account for the monies my 2003 personal checking account accrued over these years when the bank never actually closed the account like I asked them to!! They wrote off the money owed back in 2003 and discharged the account. I protested and protested, saying that they've shorted my client's money for next weekend's wedding, and they said I agreed to it when I signed the bank documents for the new account two months ago. Can they cross over the personal/business account lines like that? I mean, shorting my business account this $600 means that technically the bride and groom won't have their wedding cake because I was going to pay it off yesterday! The girl didn't seem to care whether the money wasn't actually mine, actually kind of laughed a little when I told her about not being able to pay for the wedding cake. Shouldn't they have some kind of common courtesy, heads-up, phone call, ANYTHING to alert the account owner BEFORE they just take money that didn't belong to them or me either!! I'm just sick about this because now I have to come up with $600 to pay for the cake TODAY!! Is there anyone out there that knows of a safe bank alternative? I hate banks!
    0 Votes

  • 35x35
    Apr, 2010
    Bill
    My statement above regarding all unsecured loans may have been over-broad. See the FDIC Section 226.12--Special Credit Card Provisions, and the US Supreme Court case Citizens Bank of Maryland v. Strumpf 516 U.S. 16 (1995), and Answers About the Right of Offset. I invite readers to offer additional comments and citations.
    0 Votes

  • 35x35
    Apr, 2010
    Mark
    What exact Federal Law reference can I use to let a bank know they violated the law in using Right of Setoff to pay an UNSECURED loan? It is a Federally chartered bank and I read evreywhere they cannot offset for unsecured loan, only secured ones.
    0 Votes

  • 35x35
    Mar, 2010
    Bill
    You would have to consult with an attorney in your state to find out for sure if Bank of America broke any laws with their actions. That said, if your account is not a joint account and your husband is not a co-signer, I do think BOA might have taken an action that was not within their right. Again, consult with an attorney to find out for sure.
    0 Votes

  • 35x35
    Mar, 2010
    JAGS
    Bank of America took $1940.31 on 3-12-2010 from my account to pay on a business account of my husbands. Tom does not sign on my account and I do not sign on his account. Is it LEGAL for BOA to take money from my account without notification or authorization by me? All accounts are at BOA. For 4 days I thought I had been a victum of fraud. BOA refused to give me a differedt debit card or let me close the account,and said repeatedly they didn't know who took the money. For future reference 'FDES NNF' is your bank taking your money. I became alarmed that my bank did not care about my account or the missing funds. When I did find out on the 4th day that BOA took the money, they forced me into their payment plan or they would do another 'right to offset'. BOA raised the interest from 6% to 27.99 in October 2008. BOA kept changing the due dates. BOA didnt post payments when made,took 5-9 days. BOA threatens and intimidates customers. Has BOA crossed legal lines? Can BOA be forced to return that money? Does the customer have any rights or protection from a bank that uses force, intimidation and what I consider theft? BOA is acting like a predator. I'm leaving BOA.
    0 Votes

  • 35x35
    Jan, 2010
    KB
    I didn't realize I was pointing out anything, At least anything you already didn't know. I found your information very resourcesful to my own "offset" situation. Thanks. KB- MAKING THE IMPOSSIBLE POSSIBLE!!!
    0 Votes

  • 35x35
    Jan, 2010
    Bill
    Thank you for pointing out that my earlier reply was incomplete. Social Security benefits cannot be garnished. However, if a debtor intermingles Social Security benefits and funds from other sources in an account then that account can be levied by a creditor. If the borrower's sole source of income is Social Security benefits, they should have those benefits deposited into an account where the only deposits some directly from the Social Security Administration. The borrower should ask the bank or credit union to note that fact on the account so that if the bank or credit union receives a garnishment or levy order in the future the contents of that account are not touched. "Offset" is a sort of private levy-like remedy that banks will add to loan contracts if a borrower defaults on a loan. It is unclear to me if the loan contract allowing offset will trump the federal law prohibiting garnishment or levy.
    0 Votes

  • 35x35
    Jan, 2010
    KEISHA
    THANKS ALOT BILL, I AM A DILIGENT RESEARCHER AND YOU HAVE HELP VALIDATE SOME OF WHAT I FOUND OUT ABOUT OFFSET...ALL ACTUALLY...AND TO ANSWER THE POST FROM TRACY....YESS SSI INCOME IS DEFINETLY NOT ALLOWED TO BE DEBITED NOT EVEN BY THE GOVERMENT SO EASILY- HOWEVER I PASSED OVER THE INTERNET PAGE I SAW THAT FACT ON BUT IT WAS A LEGAL PAGE RELATED TO THE IRS AND THE FEDERAL GOVERNMENT DOING SO...SO CHECK ON RESEARCHING THE FEDERAL STATUE ON OFFSET AND SSI AND YOU SHOULD FIND SOMETHING. GOOD LUCK
    0 Votes

  • 35x35
    Jan, 2010
    Bill
    Impossible for me to say. You need to review your mortgage loan documents to find language that allows your bank a right of offset.
    0 Votes

  • 35x35
    Jan, 2010
    Tracey
    can the right of offset apply to a mortgage loan that goes delinquent and your checking is with the same Florida Bank? The funds in the checking are ssi only.
    0 Votes

  • 35x35
    Mar, 2009
    Sam
    Thanks for your post, Jason. However, since I do not know your state of residence, I cannot tell you whether or not Wachovia has violated any laws in this situation. I do know that, for the most part, bank managers have discretion in requiring various forms of ID, charging fees, etc., for cashing checks. However, if you meet these requirements, they should cash any check drawn on their bank. I would recommend going in and not even telling them that you are a Wachovia customer. If they ask you if you have an account, say "no." Hopefully, they will then just process your check like any other non-customer presenting a check drawn on Wachovia. Maybe you should go to a different branch. In a worst case scenario, you may want to complain to you state Attorney General, the federal Office of the Comptroller of Currency, etc., though you will probably not receive any help for several months. In a worst case, go talk to your local legal aid office to find out what rights you have in this situation. I wish you the best of luck!
    0 Votes

  • 35x35
    Mar, 2009
    Jason
    Recently, I visited a Wachovia Bank to cash my payroll check drawn on a Wachovia account. I have a Wachovia account that is currently negative (and is in dispute with Wachovia). Can the bank refuse to cash my check due to this negative balance? If so, what is the law or set of laws that allows this? This Wachovia location did indeed refuse to cash my payroll check written on their bank. I asked my new bank, Regions, if this was legal and they agreed with me that this is an illegal policy. If this is indeed an illegal policy, how can I force/require the bank to honor their own checks in the future? Where would I complain about this instance? Upon calling Wachovia to complain they basically called me a deadbeat and told me that they are abiding by the law under their "Right of Offset". I however, cannot find one statute or case where the right of offset applied to cashing the bank's own negotiable instrument. All findings for the right of offset seem to only affect deposited monies in various forms. Please help as this is an infuriating situation. Thank you in advance for you time and assistance in this matter! Sincerely, Jason Baruch
    0 Votes

    • 35x35
      Apr, 2011
      Sandra
      They will not refuse to cash your check. You just go to whatever bank the check is from and they will cash it with a fee. If the check is through the bank your acct in disput is with then just simply tell the teeler you have no acct with the bank. They will then chrage you a feee to cash it but it will be cash. Otherwise if they know you have an acct they can apply it towards your disputed acct. They don't ask for your ssi # to cash a check just your finger print usually. I always cash my checks with bank of america since they are bof a checks and never tell them i have a c/o acct. they always cash my checks but with a 6 dollar fee because i don't have an acct with them.
      0 Votes