Is it legal for your bank to take all of the money out of your account for a checking account debt without giving any prior notice that they were doing it?

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Is it legal for your bank to take all of the money out of your account for a checking account debt without giving any prior notice that they were doing it?

Last week, my bank took every last penny from my husband and I to cover an overdrawn account from over 2 years ago with a bank that it took over. We were never informed of even just a possibility that this was going to happen. The customer service rep couldn’t tell me why our account was overdrawn but just that it was their right to take the money from us since they are now merged banks. Since there isn’t a court order for it, I’m unsure if this action is legal or not.

Asked on December 26, 2011 under Bankruptcy Law, Wisconsin

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

The answers as to the legality most likely depends on the terms of the account or service agreements you had with the bank they took over. If under those agreements, they could take money from your account to cover overdrafts or other amounts you owe them, then it would most likely be legal. (When the new bank bought the old one, they most likely bought it in such fashion that all the account, etc. agreements remained in force). You can recheck those agreements and/or ask the bank to point to the provisions or terms which give them this authority.


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