Home > 2016 > Managing Debt

Can a Lender Just Take Money Out of My Bank Account?

Advertiser Disclosure Comments 0 Comments

It’s every borrower’s worst nightmare: You check your savings account only to find it’s been sapped by a lender. You had no idea this was coming, and even worse, you’re not sure that it’s legal. What do you do?

This recently happened to one Credit.com commenter, who wrote in with this nightmare scenario that’s been edited for grammar and clarity:

I’ve been separated from my husband for over a year. His name is still on a savings account at my credit union, where he also has a truck loan. I am the only person who has been direct depositing to the savings account for six years. He apparently quit paying his truck payment. They took everything I had in the savings account. Is this legal?

To answer the question, Credit.com reached out to Alex Stern, an attorney with Little Guy Law Firm in Miami Beach, Florida. As he wrote via email, “a creditor cannot come after assets until a judgment has been entered. For a valid judgment to be entered, notice to the debtors (wife, husband or potentially both) would have to have been given (i.e., service of process of a lawsuit).”

He continued (emphasis ours), “If the judgment was obtained properly, and the account shared both people’s names, then the action taken by the bank would appear to be lawful, but these are a lot of ifs, and much more information would be needed to provide an accurate answer.”

Credit.com wondered if this is because some states allow lenders to garnish wages and others do not. But Stern wrote that “some states differ in how marital property is treated when there’s a separation.” While some states treat the separation as the date from which the assets should be divided, others start counting from the date the divorce petition was filed. “Generally speaking,” he concluded, “all states allow for some form of wage of garnishment after that state’s procedures for entry of a judgment have been followed.” But again, more information would be needed to address the reader’s specific problem. If you find yourself in a similar situation, consider speaking with a consumer attorney in your state.

Nessa Feddis, a representative with the American Bankers Association in Washington, D.C., offered a similar response involving bank accounts post-judgment: “Generally by law, banks may use funds from a deposit account to pay a loan borrowers have not repaid as agreed,” she wrote via email. “The exception is credit cards, unless the account is specifically secured by the account.”

The Dangers of Defaulting on Your Loans 

Though the commenter implies she was not responsible for her husband’s decision to neglect his loan, there’s also the chance she may have been the co-signer, which would have made her responsible for paying it off. In that case, the onus was on her to keep track of the loan and meet the agreement.

Of course, for some people, paying a loan is easier said than done. Life gets in the way, and other bills take precedence over a loan that’s been around for awhile. While this is understandable on a personal level, from a financial standpoint, ignoring a loan will do nothing to help your credit. In fact, missing several payments will drag down your score considerably, making you a lending risk.

If you’re thinking of getting a loan or have already taken one out, it’s helpful to monitor your credit as you work to pay it off. That way, you’ll know where you stand in case you decide to take out more credit. You can view two of your credit scores, updated each month, for free on Credit.com.

Image: Wavebreakmedia

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Certain credit cards and other financial products mentioned in this and other articles on Credit.com News & Advice may also be offered through Credit.com product pages, and Credit.com will be compensated if our users apply for and ultimately sign up for any of these cards or products. However, this relationship does not result in any preferential editorial treatment.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Our Owners

Credit.com is owned by Progrexion Holdings Inc. which is the owner and administrator of a number of business related to credit and credit repair, including CreditRepair.com, and eFolks. In addition, Progrexion also provides services to Lexington Law Firm as a third party provider. Despite being owned by Progrexion, it is not the role of the Credit.com editorial team to advocate the use of the company’s other services. In articles, reporters may mention credit repair as an option, for example, but we’ll also be sure to note the various alternatives to that service. Furthermore, you may see ads for credit repair services on Credit.com, but the editorial team isn’t responsible for the creation or implementation of those ads, anymore than reporters for the New York Times or Washington Post are responsible for the ads on their sites.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team