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Home >> Lending >> Personal
Bank Took Funds from Checking
I have an unsecured line of credit up for renewal. I told the bank that I was getting in trouble, but would continue to pay only interest until I got back on my feet. They wanted to rewrite the note asking for a 10% reduction and increasing the rate by 3%. I had written a check for the interest due a month ago, and consulted my attorney about bankruptcy. He advised me to put a stop payment on the check, which I did electronically, and have confirmation of doing so. The next day the bank took the funds out of my checking account along with additional funds, which I assumed were for additional interest. Can the bank take money out of my checking without my permission? The bank is located in Arkansas.
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 There is not enough information to accurately answer your question based on your exact circumstance. In most cases, your loan and deposit agreements have a setoff provision. That means that if you owe them money (the line of credit), and they owe you money (the deposit account), they can setoff the amount owed by taking from the deposit and applying it to the loan.
Had you already filed bankruptcy, you would have prevented this. You would have an umbrella of protection preventing the collection action, known as a "stay". If you proceed in bankruptcy, your attorney may be able to have that setoff action reversed, but that depends upon your case and the attorneys and trustee involved.
Published on BankingQuestions.com 5/29/08
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