Right of offset

[WhatMoney]

Question: Does the "right to offset" by credit unions also apply to protected funds such as Social Security?

Yes and no. SSA deposits are exempt from outside bank account levies from a judgment, but the banks can take whatever they want to pay for fees and overdrawn accounts from direct deposited Social Security funds, for example, if the SSA funds are direct deposited into the same overdrawn account or a connected account.

For other loans and credit card defaults that belong to the bank or CU, I think the right to offset language would need to be written into the loan contract before they can take exempt funds from a checking account. But I'm not sure about this. Banks often make up their own laws.

[Frogge]

Yes and no. SSA deposits are exempt from outside bank account levies from a judgment, but the banks can take whatever they want to pay for fees and overdrawn accounts from direct deposited Social Security funds, for example, if the SSA funds are direct deposited into the same overdrawn account or a connected account.

For other loans and credit card defaults that belong to the bank or CU, I think the right to offset language would need to be written into the loan contract before they can take exempt funds from a checking account. But I'm not sure about this. Banks often make up their own laws.

Yes, this is true to my best knowledge.. I worked for a CU briefly and wasn't involved in their collections although I know they have stiffer holds and protection methods than a lot of banks do because of their structure.

As far as the Right To Offset clause being clearly stated, in my experience at the banks I worked in this was as equally prominant in the Note as any other terms, and was not hidden in small print (as it probably is in a lot of major CC disclosures). However, there were plenty of people who just viewed this as typical language and were shocked when we tapped their accounts for past due payments. That's why I strongly stress to read everything before you sign or enter into a dispute with a current lender. (I've also been burned badly, even with banking/lending experience)

[lrprn]

Question: Does the "right to offset" by credit unions also apply to protected funds such as Social Security?

Are SS or disability funds legally protected from seizure? Yes.

But here's the bad news....when Social Security or disability funds are deposited in your checking or savings accounts, banks and credit unions rarely go to the trouble to find out what KIND of funds you have in there. They take the funds and force YOU to go through the legal motions to get your SS or disability funds back. It often takes months, and you are without the funds (sometimes literally penniless) until the funds are returned. Welcome to world of today's soulless, profits-drive-everything banking system.

[PoorGrammyinBK7]

Just wondered - can they take your funds even if you are not behind on anything - just because you filed BK?

[magyar123]

Just wondered - can they take your funds even if you are not behind on anything - just because you filed BK?

NO

[PoorGrammyinBK7]

Thanks magyar123 -- whew! I've been afraid to put any money in the credit union acct - but we are current on everything there.

[southernbelle]

I had a checking account with the credit union where I bk'd a credit card for about $6k. Since I keep getting statements every month showing about a $35 balance in the account, I thought I'd try my luck. I went yesterday and closed the account with no opposition. I thought they would give me a hard time, but I guess it was such a tiny bit of money, it wasn't worth them taking it. I wanted to withdraw it since every little bit helps and I needed the money for gas. Who knew?

[justbroke]

I had $2.7K in one of my Banks. I also had an Overdraft Line of Credit with them. I did not include the LOC on my schedules on my Chapter 13 filing... because I didn't really think of it as "credit".

Lo and behold, the very next day after filing, they took $1,523.00 from my CHECKING ACCOUNT and "charged off" my Line of Credit. They also shut down my ATM/Debit cards on that same checking account too. Brutal.

BEWARE of having your money in any Bank where you have any potentially charged-off accounts (from your Bankruptcy). It happened so fast, my head is still spinning from it (filed last Wednesday, they took the money on THURSDAY).

I have since opened up a new checking account at a "neutral" Bank and have spent all of Friday moving my DIRECT DEPOSITS (two of them) from that Bank to the new Bank!

[justbroke]

Just wondered - can they take your funds even if you are not behind on anything - just because you filed BK?

YES! See my response just above this one!!! I was not behind and had a 100% payment record over 7 years.

[No Gravy]

I had $2.7K in one of my Banks. I also had an Overdraft Line of Credit with them. I did not include the LOC on my schedules on my Chapter 13 filing... because I didn't really think of it as "credit".

Lo and behold, the very next day after filing, they took $1,523.00 from my CHECKING ACCOUNT and "charged off" my Line of Credit. They also shut down my ATM/Debit cards on that same checking account too. Brutal.

BEWARE of having your money in any Bank where you have any potentially charged-off accounts (from your Bankruptcy). It happened so fast, my head is still spinning from it (filed last Wednesday, they took the money on THURSDAY).

I have since opened up a new checking account at a "neutral" Bank and have spent all of Friday moving my DIRECT DEPOSITS (two of them) from that Bank to the new Bank!

Whoaaaa. Excellent "better safe than sorry" advice!

[becky20]

How could they take money AFTER you file, I thought you are protected... I have a checking acct with Chase and had a credit card/overdraft protection and it's been probably a year since I paid on it. Filed ch 13 a month ago and so far funds have been safe, I thought now that I filed they couldn't touch anything...

[justbroke]

How could they take money AFTER you file, I thought you are protected... I have a checking acct with Chase and had a credit card/overdraft protection and it's been probably a year since I paid on it. Filed ch 13 a month ago and so far funds have been safe, I thought now that I filed they couldn't touch anything...

It's called a right of set-off. I don't understand it myself, but it's there. I had never been late or ANYTHING, ever, with that account.

[Cali]

We BKed 45k from a bank we have money in. It isn't our primary bank though.