I had been with one bank for a good amount of time, but have recently opened an account at another bank. I haven't used my old account for seven months and they closed it. I recently found out that some money had been deposited into this account.
How can money be deposited into a closed account? I had an auto loan with the bank in which they repossessed my car. Does the money that they make from selling the car go towards paying what was owed on the loan? If they sold the vehicle for more than what was left on the loan, would they deposit the funds in the now closed account?
Some banks will return a deposit that is made to a closed account. Some banks force the account open again. More often the former is the case.
When an auto or other collateral is repossessed and sold, one of two things happens. Either the property is offered for sale at a public auction and the proceeds go first to the bank for its loan and fees owed, and then the excess goes to the borrower, or the property is bought by the bank at repossession and they own it. It would be at the point of this sale, when it would be known if the borrower is to receive the excess or owe the loss.
If the bank buys it and sells it later, they can have a gain on sale, or a loss on sale. They profit or lose with no impact to the borrower. This is common on home foreclosures.
Your state laws may vary. You are always free to ask the bank when the collateral was sold and how the funds were applied.
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Some banks will return a 