Is it legal for my bank to withdraw funds from my account without prior notification?

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Is it legal for my bank to withdraw funds from my account without prior notification?

I have a checking account with and 2 days ago they withdrew $605.55 from my checking account leaving me with a 0 balance. When I called to inquire about the withdraw, I was advised that in 02/08 I had an account with another bank closed due to overdraft fees and that I owed $1069. Since my current bank took over my former bank they say they were entitled to withdraw the funds. I opened my account with my current bank prior to their takeover of the first bank. So is this legal? I asked for them to deposit the funds back and I it could make arrangements on what they say I owe but they said, “No”.

Asked on August 20, 2010 under Bankruptcy Law, Illinois

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

If the agreement you had with the former bank would have allowed them to deduct money from your account if you owed them money (e.g. for overdraft fees), then it is very possible that the current bank could do this in this case. Since they bought the other bank, it is likely that they acquired all  its agreements and contracts to, which means that any obligations you had to the former bank are now obligations of the current bank. Indeed, even if the former bank could not have simply withdrawn the money, if the current bank could, they may still be able to, since in buying  the old bank, they bought its accounts receivable and other monies owed to it--so if you owed the old bank money, you would in that case now owe the new bank money, and they may be able to use any remedies (like taking money out of your account) for debts acquired from the old bank that they could use for debts owed directly to them. If neither bank had the authority, under your depositor/customer agreements to take money out of your account if you owed the bank money, in that case, it would be difficult to see how they could do this.


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