The business that I work for has two accounts, payroll and operating. The operating account was put into overdrawn status by a reduction in line of credit. The bank withdrew money from the payroll account to cover the operating account overdraft. This puts the payroll account in overdraft condition as payroll checks clear or bounce. Is this bank transfer legal, generally speaking?
Unless there are state laws protecting the payroll account, the bank generally has a right to set off the black balance in the payroll account against the red balance in the operating account (transfer funds from a positive balance account to a negative balance account). This assumes, of course, that the bank acted within the terms of its loan agreement when it reduced the line of credit, precipitating this series of events.
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Unless there are state laws protecting the payroll account, the bank generally has a right to set off the black balance in the payroll account against the red balance in the operating account (transfer funds from a positive balance account to a negative balance account). This assumes, of course, that the bank acted within the terms of its 