Can a credit union freeze an account until there’s enough money in it to cover a debt that is owed to them before others are paid?

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Can a credit union freeze an account until there’s enough money in it to cover a debt that is owed to them before others are paid?

Our credit union will not allow us to take money out of my deceased father in laws accout so we can pay other bills that are owed so they stop accruing interest rates? Is this allowed?

Asked on May 2, 2017 under Estate Planning, Virginia

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

It depends on the terms of his account: if the agreement(s) under which he banked with them provided that they could do this, they can. Otherwise, if they do not have contractual authority (i.e. power from terms of service, account agreement, or other agreement with them) they can't, since without such authority, the fact that they may be owed money by him does not entitle them to take, freeze, etc. his funds, any more that if you borrowed money from a neighbor and failed to return it, that he could freeze, etc. your funds.
Ask them to show you the authority by which they are doing this: i.e. the agreement(s). If there are none, you may wish to file a complaint with the agency regulating credit unions in your state.


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