If I have a student loan with a private lender that went into default, is it legal if they took money out of my savings account to pay it off?

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If I have a student loan with a private lender that went into default, is it legal if they took money out of my savings account to pay it off?

I have my savings account with the same company that holds a private student loan of mine that went into default. They took (without warning or notice) all of my money in my savings account to go towards paying the loan and they refuse to give that money back. Do I have any recourse to get this money back?

Asked on March 3, 2012 under Bankruptcy Law, North Carolina

Answers:

MD, Member, California Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

You may not. You are responsible for knowing what you sign when you sign onto a bank account. For most banks, you have something you automatically agree to when you sign on with the bank -- it is in the disclosures and tiny brochures they give you. This item is called off-setting. You basically gave the bank authority to off-set defaulted accounts (whether it be loans or checking or savings accounts) from other accounts that have monies in them.


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