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Home >> Lending
Will Husband's Default of Loan Affect My Account?
My husband and I have a joint checking account. Into this account, my merchant processing (credit card deposits) are deposited. The merchant servicing account is in my name only. My husband fell behind on a $5,000 line of credit in his name only. All of this is with the same bank. Can the bank affect my merchant servicing for his slow pay?
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 It sounds as though you have a joint personal checking account that is used for business purposes. This may be allowable by some banks, and not by others. Some banks require a business account to be in the name of the business, which makes the business entity the owner, not necessarily the owners of the business. A sole proprietorship is a clear example of an exception as there isn't a separate business entity such as a corporation.
Assuming it is a joint account, if your husband is on the debt and is past due, and is an owner on the deposit account, yes, the bank may debit (setoff) the deposit account for the loan. We would urge him to make payment arrangements with his lender for payment so they don't look for the deposit account.
If the deposit bank and lending bank are different, the only way they may get to the deposit account is through a court action. That isn't setoff but would be through a civil suit.
Published on BankingQuestions.com 3/11/10
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