What is my liability for a bank’s error?

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What is my liability for a bank’s error?

I paid my vehicle loan off in full in 12/10. I received the title, and signed and notarized a lien release. I received in the mail recently a missed payment notice from the bank stating that I missed January’s payment. Upon contacting the bank they stated that there was a billing mistake in 04/10 whereby another customer’s funds where applied to my loan and that was just discovered. They are now expecting me to pay them for this error and threatening me with taking action against my credit score. What can I do about this?

Asked on February 14, 2011 under Bankruptcy Law, Alaska

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

Is the bank right? That is, when you look at the amount of payments you actually made and compare it to the money you owed or total payments you should have made, did you in fact not make one payment? If that's the case and you did not pay as much as you should have--as you were obligated to--under the loan agreement, then the bank can ask you to pay the rest. If you don't pay it, you'll be in default and they can take legal action (and report the default to credit rating agencies). If the lien's been released, they probably can't proceed directly against the car (e.g. no repossession), but they would be able to either sue you and/or report a default which will damage your credit score. Obviously, if the bank is wrong and you can prove you paid the full amount, they have no grounds to proceed against you.


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