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Loan Mixup
Can a Credit Union keep me from taking out money from my savings account? They say that I have a loan with them, but I never signed any papers, so therefore, they refuse to let me take funds from my savings account.
I inquired about refinancing my auto loan with this Credit Union, but I never signed any loan papers, I just inquired, but they paid off my loan anyway. Now they say that I owe them the money that they paid. They paid without my authorization or signature. Do I owe this money to them and can they hold my savings account as hostage?
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 If they paid off your loan elsewhere, are you proposing that they should not be repaid? While I can't see how they would make such a mistake, tell them you'll pay a loan to them that is on the same terms as what you had, no less. They get their money back and you have no additional cost than you would have otherwise. That seems fair.
If you try to not pay them, and they are not able to get the money back, it may be that they can keep your savings account and apply it against the debt they paid for you. Two issues come into play here. Speak with an attorney, as this is not legal advice, but there is the right to setoff which means that if you owe them money, the two can be setoff. The other issue is undue enrichment. That is, they didn't pay off your loan for nothing, and you shouldn't benefit from a human error. Do you believe you should? Would that be fair? If you were shorted money at the teller window or at an ATM, is that just an error in their favor and it is too bad for you?
Published on BankingQuestions.com 2/19/09
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