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Proving He was Only a Co-signer
A son was on his mother's account as a courtesy signer. Her account was cleaned out to settle debt on son's loan for which she was not a co-signer. She went in to explain that he had no ownership of her account, but was told only that because his name was on the account they had the right to take the money. They never contacted her prior to this action. How does she prove that he was not a co-owner? What proof must they show that he was? I know you don't give legal advice, but if this is not resolved by a higher level manager, can funds be recovered by suing in small claims court? For $1100, an attorney would not be worth it.
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 The bank's records, in particular the deposit account signature card, is the controlling document that will indicate if the son was signed as an owner or a "convenience signer" on the account. The latter has the ability to write checks, but is not an owner of the funds.
Ask the bank to show the mother the card and explain it. If they made a mistake taking the funds, they must be replaced immediately, but if the son was signed on as an owner, even if that wasn't the mother's intention, the funds were legitimately taken. Prior notification isn't required. If it was, the funds would never be there. This was a process or setoff or offset. Both terms are used. You can find more on this process by searching this site. If the funds were taken in error, or if the son was added to the account in error, the mother can speak to an attorney and determine if any claim is warranted, be it in small claims or another court.
Published on BankingQuestions.com 12/08/10
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