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Home >> Accounts >> Checking Accounts
Bank Clears Check, Then Reverses
I deposited a $4500 check in my personal account at my bank, and after one week the bank cleared it. I withdrew funds to pay expenses for my small business. I have a business account at the same bank. One week later the bank called to reverse the clearing of the check, requesting I put the money back immediately because the bank would not approve the funds. As a result the bank closed both my personal and business accounts.
How can a bank clear a check, than reverse its decision more than a week later? I informed the bank that without my business account, I can't restore the funds, because business clients make checks out to my business. I need advice on recommended sources that I can force this back to reopen my account and restore my funds.
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 Banks are required to give you access to funds deposited by check within certain deadlines, regardless of whether the checks are actually paid by the banks on which they are drawn. Under the law, you remain liable for the amount of any check you deposit if that check is returned unpaid, even if your bank has permitted you to withdraw those funds.
The bank probably also has in its deposit contract a provision allowing the bank to cover an overdrawn bank balance from other deposits of the same customer within the bank, or your state law provides essentially the same right. That's referred to as a right of offset.
In this case, it was not the bank's decision to reverse the credit you had received for the deposited check. That decision was made by the bank the check was drawn on. Your now former bank is certainly not obligated to restore your funds.
You can appeal to the bank to reopen your business account, but the bank is not required to do so. You may need to open an account with another bank in order to operate your business.
Published on BankingQuestions.com 8/18/08
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