Can a bank take money out of my account without a court orderif I owe it money on a credit card?

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Can a bank take money out of my account without a court orderif I owe it money on a credit card?

I have a credit card with the same bank that I have my checking and savings account with. I have been having trouble making payments and they have taken 2 payments out of my checking account without notifying me until after they did it. I was wondering if it is legal for them to do this without a court order first? The first time they did this was a month ago and I had just gotten some money back and had planned on making payment but they just did it again and it overdrew my account. Now I have utility bills that are going to bounce and get turned off.

Asked on October 15, 2010 under Bankruptcy Law, Kentucky

Answers:

M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

Yes, a bank does have the right to do this - without prior notice. This right is referred to as the "right to set-off".  Basically, once you open a checking or savings account with a bank, that money becomes its property. Accordingly, you become the bank’s creditor once you start depositing money into the bank. The funds within your account are in control by the bank. While most people think this is still their money, it is actually the bank’s promise to repay you that amount. If you borrow money from the same bank for a loan, a relationship is established such that the bank is allowed to withdraw money form your account if you do not repay the loan as you agreed.

Note:  There are some exceptions to a right to set-off but they don't seem to apply in your case.


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