Suddenly, bank account was gone

[Liberal_in_LA]

Suddenly, bank account was gone
Couple learns the hard way of bank’s ‘right of setoff’
By Lucy Soto


When Hope and Matt Hughes stopped for supplies at a pet store last month, they thought the trouble with their debit card was just a glitch. But it turned into a financial crisis.

Hope, left, and her husband Matt Hughes had their checking account at Wachovia-turned-Wells Fargo wiped out when a student loan with the same bank was called in.

They quickly discovered that their bank, Wachovia-turned-Wells Fargo, had deducted $4,059.82 from their checking account, wiping it out.

It was no glitch. It is called the right of setoff or offset, a long-accepted practice dating to early English common law.

When the right of setoff is applied to bank accounts, it works like this: When consumers place money in bank accounts, they are basically agreeing to let the bank borrow the money, with a promise to repay, usually backed by the Federal Deposit Insurance Corporation. If the consumer then takes out a loan with that same bank and falls behind, the bank can use the money in that account to offset the loan.

The trouble stemmed from Hope Hughes’ $10,000 student loan, which the bank called in.

Now, the couple, who rely on Matt Hughes’ once-a-month paycheck from Kimberly-Clark, have had to sell possessions on Craigslist, tap into his 401K and negotiate with creditors so they don’t put their house and car loans in danger. And they were charged $385 in overdraft fees for purchases that would have cleared their account the day it was cleaned out.

“We are so far behind,” said Hope, 36. “I don’t want anybody else to go through what we’ve been through. ... I was blind-sided.”

According to the Consumer Credit Counseling Service of Greater Atlanta, more people are finding themselves in this situation. CCCS is a nonprofit financial counseling agency

http://www.ajc.com/news/suddenly-bank-account-was-508472.html

[Blue_Tires]

1. Good to see the bankers haven't run out of ways to be douchebags...

It's not like more people can hate them that don't already...

[KansDem]

2. Man, I am so glad we bailed out the banks!

:sarcasm:

What other country would tap its citizens for a bailout, then turn around and do shit like this?

The rest of the world must be laughing at us...:grr:

[Fire1]

6. I know the people in Athens Greece are laughing their asses

off!!

[upi402]

3. OMG, I'll withdraw my Wells Fargo account tomorrow

This is predatory and abusive. Back to the inconvenient credit union for us -though it's not any fiscally healthier.

k/r

[Lochloosa]

19. Go here and find out the best in your area

http://www.bankrate.com/rates/safe-sound/bank-ratings-search.aspx

[DURHAM D]

32. Thanks but those are mostly online banks. nt

[dixiegrrrrl]

58. Uh, no , bankrate is for ALL bank ratings.

I check mine every month or so.

[DURHAM D]

65. Everything listed in my area was an online institution.

[Cal Carpenter]

95. According to the article (near the end)

Credit Unions can do this too - even for credit cards or revolving accounts (which most banks can't do).

Not trying to imply you should keep your Wells Fargo account if you don't want to of course, but the reality is that the laws and regulations tend to favor the financial institutions, not the people, and that's going to be true wherever you store your money (unless it's under your mattress, hehe).

My understanding is that credit unions are less likely to be taking advantage of customers, but it's surely not a given.

[Hassin Bin Sober]

113. Don't think a credit union wouldn't do the same to you.

In fact, they may be MORE likely to exercise right of set-off and confiscate savings as the credit unions are usually smaller in size and less able to take a hit. The big banks are less likely to put two and two together and snatch your account. I'm not surprised the big lenders are going this route to mitigate huge losses.

I've been in consumer lending for twenty years and I have always counseled customers to keep their borrowing and savings at separate institutions. Definitely move money if you are in trouble on a loan that is linked to your savings.

[Lance_Boyle]

4. Instead of buying stuff at a pet store they should have been

paying off the loan as contracted. Had they been making the contracted payments, there would have been no right of offset. Why do people seem to think they can renege on their contracts (mortgages and other loans) willy nilly with no consequences?

[Liberal_in_LA]

8. She says that the student loan wasn't due yet, she was still in her 6 month grace period

after graduation

[Statistical]

29. Nope read again. By her own dates she was 6 month over due when bank took funds.

[HALO141]

38. Well.... She was 2 months overdue, taking into account the 6-month grace period.

We have no way of knowing if the grace period is as they say or not because we don't have the contract to look at. But, accepting the Hugheses' statements as fact, they were 2 months behind.

Still... All the letters and faxes should have been a clue that something was seriously wrong and it was foolish to leave all their money in that institution.

[Statistical]

42. No she was 6 months overdue even if you accept her dates as gospel.

Graduate: May 2009
Grace Period: May 2009 - Oct 2009

Loan wrote off: Jan 2010 (3 months overdue)
Bank funds seized: Apr 2010 (6 months overdue)

I mean if you are 6 months overdue on a loan to a bank it is kinda silly to keep $4000 cash at the same exact bank.

[HALO141]

50. Obviously, we're not counting it the same way.

I started counting in June because I don't think that payments (not accounting for a grace period) would necessarily start the same month as graduation. And I only counted up to the point when the loan was written off.

June - Nov. = 6 months.
Dec. - Jan. = 2 months.

The loan was in collections since January. You're right, that was another 3 months.

[Statistical]

51. Could be right. I assimed 90/180 days deliquent because usually those are magic numbers in finance.

Since we don't know the exact dates I kinda assumed the bank was using 90/180 because they fall close.

Still I admit that is just a guess. If your counting is right then she "only" missed at least 4 months of payments before bank seized funds.

Dec, Jan, Feb, Mar, Apr

I guess the larger issue is on what planet should we be surprised when an idiot missing 4 months of payments to a bank and then gets $4000 seized because she kept said money IN THE SAME EXACT BANK she was stiffing? :)

[LanternWaste]

54. But other than all of that-- spot on!

You assumed 90/180, you assumed they decided to simply not repay the loan ever, you assumed they believed there would be zero consequences, you assumed the trip to the pet store counter-acted their ability to pay the loan. But other than all of that-- spot on!

[Statistical]

62. Once again for the reading impared 90/180 is most likely but even if you take most conservative..

Funds were not deducted until 4 MONTHS after grace period expired.

Generally speaking unless you are an idiot you should assume the bank will try to do something to reclaim its money after 4 MONTHS!

If you are going to be stupid enough to stiff the bank on a student loan at least be smart enough to not leave cash in the same bank. :rofl:

[LanternWaste]

79. As I said... spot on.

As I said... spot on-- generally speaking.

[caseymoz]

97. Question is not whether it's smart or stupid.

Question is whether it was right for the bank, who you assume hires somewhat smart people, BTW, to call the loan in immediately and take ALL THEIR MONEY AT ONCE. How spirited are the couple going to be to repay the rest of the their loan? Now that they've put the couple in deep trouble with every other creditor, how long will it be before these people are even inclined to open one of the bank's letters?

And how inclined are other people going to be to ever take out a student loan with this bank? Or a student loan period? This kind of ham-handed action hurts the general education of the country, which is thirsty for more educated people.

Stupid assholes.

[Statistical]

107. It is called loss mitigation.

99% of loans that are 180 days overdue without a payment never become current.

The bank is almost guaranteed a loss. You could buy 180 overdue loans for a penny or two on the dollar they are next to worthless.

So given a almost guaranteed 100% loss or recovering $4000 which is roughly 50% of principle does it really makes sense to not recover what you can?

She was 180 days overdue (90 days after bank notified her they were writing loan off) at the time of seizure. To call the "immediately" is silly. 180 days overdue is hardly immediately.

If you are 180 days overdue on mortgage then they likely will be foreclosing.
If you are 180 days overdue on a auto loan then it likely is being repossessed.
If you are 180 days overdue on a student loan then it likely will be offset.

All three are loss mitigation. At that point the goal isn't to make a profit or even break even. The goal is simply to minimize how much the bank loses.

[caseymoz]

116. But again, you're arguing about whether it was smart for the couple.

Maybe 99 percent of general loans, but student loans, by law, are much more difficult to walk away from than other loans. I'd like to see what statistics on those specifically really are. It simply was not smart or right for the bank to do this in this economy, using a law like that, which was made in the age of debtors prison and the public rack. It also breaks the illusion for customers that money they put in a bank is actually still theirs. Not something I'd want to do now if I were in finance. After every thing else the banks and the finance industry has done, this is not "loss mitigation." It's more like reminding us that they're dicks who should never be allowed near our money. Yes, that mitigates the billions of dollars we had to bail them out with.

And if the bank is going to do this, it should never, ever, charge them for trying to draw on an account the bank itself had closed, without informing them.

[Name removed]

109. Deleted message

Message removed by moderator. Click here to review the message board rules.

[Name removed]

9. Deleted message

Message removed by moderator. Click here to review the message board rules.

[Name removed]

10. Deleted message

Message removed by moderator. Click here to review the message board rules.

[Gormy Cuss]

11. It pays to read the link

Hope Hughes said she thought she had six months to begin paying back her loans after her May graduation from Kennesaw State University. ...

After several rounds of calls and faxes to prove she graduated in May 2009, not December 2008, as the bank believed, and a last-ditch application for a deferment, she thought things were settled. Then in January, the bank apparently wrote off the loan, meaning it was sent to its collections department. She began receiving bills for the total amount, plus interest and fees: $11,338.60.

The problem was a loan servicing error compounded by a bank error, not her failure to pay the loan as agreed.

[Commie Pinko Dirtbag]

13. But don't you see? Facts don't matter, banks are always right and common people are always wrong.

Now shut up, inferior. You owe Graham's Number dollars to my bank because you're a deadbeat and failed to pull yourself up by your bootstraps.

[Statistical]

28. So she graduated in May 2009 and the bank wrote loan off in January.

So she proved to bank she graduated in May 2009
May 2009 - Oct 2009 was the 6 month grace period.

Payments would start in Nov 2009. Bank received not a single payment three months later (January 2010) so they wrote the loan off.

Looks like Bank fixed the mistake of thinking she graduated in December 2008 because if they hadn't they would have wrote loan off a long time before January 2010.

So now loan was wrote off In January but they didn't seize funds until 3 months after that (6 months of non payment).

I am no fan of big banks (go with local credit union) but really what did she expect. To never pay the student loan and keep $4000+ in a checking account at the same bank. Really?

[Gormy Cuss]

31. Where does it state that she made no payments after the grace period?

The bank demand for the balance is all that is mentioned. No discussion of whether payments were made or were attempted.

Sorry but I've been on the wrong side of a similar bank error, where an institution changed the terms of my account based on the presumption that I had left college when I was in fact still enrolled full time. Even after producing the paperwork to authenticate my status it still took a lot of calling up the food chain before the situation was rectified and I was reimbursed for the bank charges.

[Statistical]

35. You can only use bank offset is loan is in default.

Loan isn't in default if she made payments on time. Notice in her story she never makes the claim that bank took funds even though she way paying loan on time. Actually she never makes a claim that she made any payment.

The only defense she provides is this:

Hope Hughes said she thought she had six months to begin paying back her loans after her May graduation from Kennesaw State University.

She graduated in May 2009. The grace period ended in Oct 2009. The bank didn't write loan off until 90 days later (Jan 2010). They didn't seize funds until 90 days AFTER THAT (Apr 2010).

The point is the offset happened 180 days after first payment was due.

If she made payments then that was a bank error and should be fixed (she never makes that claim though).
If she didn't make payments well the bank should seize money. If you are dumb enough to stiff the bank for 180 days despite having money and then keep said money in the same bank well that is kinda stupid. :rofl:

[Gormy Cuss]

37. We can choose to believe her or the bank.

Since the bank was, as is typical, not forthcoming with their version of events, I have my doubts that the bank acted appropriately (see revised post above -- I've had experiences with bank errors and in all three instances to date, the institutions were not terribly interested in owning up to it.)

[ProdigalJunkMail]

39. the problem with bank errors is YOU have to be able to PROVE

it is an error. if you can...you get your money back. if not, you probably are the one in error...not the bank.

sP

[Gormy Cuss]

52. Even when you have proof, banks don't like to admit the error.

At least that was the case in two of the three times it's happened to me. Only one bank apologized for its error. The other two finally corrected the problems without any direct acknowledgment other than a series of transactions posted to me account. Yes, I was fortunate that I could prove the errors were not mine because the banks certainly took the position that they didn't make errors.

[ProdigalJunkMail]

55. and they always will take their own side...

but i never would expect an apology...i couldn't give a rat's ass about words. i want to me made whole again...and as long as they do that i am happy. i was taught ages ago to keep all contracts you sign for the life of that contract and to keep immaculate banking and tax records and to this day i have always been able to prove my case in the event of a dispute. if you have the records...you win. i wish schools would teach classes on it...

sP

[Gormy Cuss]

59. I agree.

The first financial lesson is understand the terms and conditions before you sign. The second is document, document, document. I was fortunate to learn these lessons when the first incident happened.

The apology to me was a sign of good customer service but it wasn't expected. What was expected was that they rescind all charges assessed to my account thanks to their error as soon as they got the documentation and acknowledge it immediately, not weeks later when it was convenient for them.

[Statistical]

40. She never made the claim she paid anything.

She only claimed that she thought she had a grace period.
She did have a grace period and it expired in Oct.
The bank didn't write the loan off until January (3 months later) and didn't seize funds until 3 months later in Apr 2010 (6 months after Grace period ended).

If she made payment don't you think that would have been in the story.
Something like:
"I don't understand why the bank wrote the loan off I made all my payments on time".

She never made any claim anywhere in the story about making even a single payment. That is just an assumption you made.

[Gormy Cuss]

53. She also claimed that she applied for a deferment.

And yes, I'm choosing to believe her. That's an assumption, just like assuming that the bank wouldn't have called the loan or invoked the offset without justification is an assumption that you made.

[noiretextatique]

69. i believe her too

iwould never give a bank the benefit of the doubt given my experiences with banks.

[noiretextatique]

68. someone stole 800.00 from my account by cashing a check with no ID

which the bank admits is against their policy. clearly this person had an accomplice in the bank. still didn't get my money back. i would never believe a what a bank claims as truth.

[Name removed]

110. Deleted message

Message removed by moderator. Click here to review the message board rules.

[Name removed]

108. Deleted message

Message removed by moderator. Click here to review the message board rules.

[ceile]

12. Didn't read the article before posting?

She was in a grace period and was filing for a deferment.

[Statistical]

63. She was not in Grace period.

The bank took funds 4-6 months after grace period expires.

Generally speaking you need to repay loans.

[Newest Reality]

16. As far as I remember,

a bank can "call" a loan anytime they want to. I recall reading that in some fine print a few times.

So, basically, your car or auto loan could be called any moment ... if that is still in effect.

Any criteria or more info about the state of that?

[Statistical]

30. Not true.

Loan is only callable in default or if a condition of the loan.
Most (not all but most) loans are not callable.

Of course if you don't read the fine print you could accept a callable loan but generally banks don't make callable loans to consumers because it is unlikely they could repay it and then likely they default and bank loses. So why do it.

[Angry Dragon]

21. You are not a nice person......

You need to read a little better

You need to apologize...

[Name removed]

103. Deleted message

Message removed by moderator. Click here to review the message board rules.

[izzybeans]

23. Yes contracts make it okay to steal.

..if you're a bank.

[HALO141]

47. Technically, it's not stealing IF the bank is within the terms of the contract.

That's why we have contracts in the first place.

Don't get me wrong. Banks are generally assholes of the first degree and I am loathe to stick up for one but truth is truth.

[TalkingDog]

36. I agree. They should kill their pets and eat them, then pimp out their kid online

they could have that loan paid off in no time....

[Statistical]

49. Who said pay the loan off. She could have made payment on the loan to avoid it going into default.

Sitting with $4,000 in same bank you are skipping payments on student loan is kinda silly.

[LeftyMom]

67. So you're saying if you're behind on your student loan to let the family dog starve?

It's the pet store. They don't sell flat screens, they sell dog food. Jebus.

[Lorien]

91. One of DU's most prominant Authoritarians

The ruling elite loves a guy who argues for their cause!

[nashville_brook]

88. someone needs to lance your boil.

[DJ13]

5. Years ago our bankruptcy attorney advised us to close all accounts

with any bank we had accounts in that we also had a credit card account with before filing just for this reason.

Never have credit with the same institution you have accounts with.

[Skink]

27. Yeah but what if bank America buys out all the credit companies...

then starts sending you statements that all appear the same.
For me it got to the point where they could have made up another account, put it on one of their generic statements and I'd of had a hard time telling if it was real or not.

Of course I did not know about that law either. In retrospect I can't believe BA didn't try that.

[slackmaster]

48. B of A has me as a co-borrower on my ex-wife's credit card

I've been divorced for over 10 years. The account was an employee card from when she worked at the credit card division of a bank that B of A bought.

I never signed an application, never authorized anyone to put my name or SSN on the card, never looked at a statement, received no benefit from the account (which has had a zero balance for most of the time we've been divorced), and I'm liable if my ex defaults on it.

[Better Today]

7. Yep, I've told my kids over and over, don't get loans where you

bank your earnings. It's just plain stupid. I don't have a credit card with the bank of earnings deposits either. Also I don't use online payments between banks, that way there's no way I've accidentally given implicit acceptance to them drafting out of the earnings account.

I've never bought into the "friendly" bank idea. With one bank I do some business with, I could if I chose, and they'd love it if I did, to bank, invest, be insured for everything accept health, have numerous types of loans... yeah, no, I don't think so. I have banks that I pay to and I have banks I deposit to, and ne'er the two shall meet, or I suppose overlap is the right term.

[bergie321]

14. Only problem is

That there are becoming fewer and fewer banks.

[Better Today]

25. True dat.

[Blue_Tires]

57. +1

[Angry Dragon]

15. Robber barons

[high density]

17. I know I signed something agreeing to this when I opened a loan and share account at a credit union

It basically said any deposits I make can be seized should I default on the loan. It seems rather reasonable.

The borrower in this story says it is unethical for the lender to take back the money. Is it ethical for a borrower to let a loan go to collections? Granted there was an error in the graduation date, but it was really up to the borrower to keep up on that.

I'd love to see what they were driving for cars and how big their house is.

[ljm2002]

18. I had a different experience recently...

...an account of mine was hooked to an investment account. Unbeknownst to me, some rule somewhere changed and the back was required to put the money into one account or the other -- either my checking account or the investment account.

So without notifying me they put it into the investment account.

Cue me at the gas station, buying gas. Declined. Hmmm, I thought, their card thingy must not be working because I just checked yesterday and there was nearly $4K in the account. So I just paid cash and did not worry.

Next day I went to make a deposit and checked the balance first. Shock! My balance showed as negative $900!

So I called the bank, who put me through to the brokerage firm, who said Oh yeah, we didn't manage to contact everyone. No worries, we'll put it back and the bank will cover the overdrafts.

And it was back in my account the next day. But I'll tell you what, my feeling that I have any control over the funds in my accounts has evaporated.

[Xithras]

20. NEVER get loans from your regular bank. EVER.

This isn't a new practice, and is something that EVERYONE should be aware of.

Never take loans out at your regular bank. If you DO have loans out at your regular bank, and you are no longer in a financial position to keep up on those loans, pull your regular accounts and move them to another bank ASAP.

I know a guy who lost over $20,000 this way. He had an equity line with his wife, and couldn't afford to make the payments after they split up. The divorce judge had ordered them to split the debt, but the bank seized the FULL balance from his savings account before he could work with the bank to break the debt up. Legally, there was nothing anyone involved could do about it. If he had just moved his money elsewhere, he'd have been fine (his bank was Wells Fargo, btw, but BofA is notorious for doing this as well).

[jthorpe]

22. thank god for the bank bailout.

Government: FAIL
Banks: FAIL
People that should never have bought houses: FAIL

[Name removed]

26. Deleted message

Message removed by moderator. Click here to review the message board rules.

[DFW]

24. I have to wonder if there are any non-predatory banks out there anywhere

Here in Germany, my wife was asked if she would come in for an appointment with a new "investment counselor."

I went along, as I smelled a rat. The twenty-something had a bunch of fancy brochures and fancy talk about why
some investment vehicle he was being told to peddle was a great deal for people with an "unhealthy" balance of
their savings in just a cash account. My wife and I examined it, and even among the German legalese, it was plain
that their bank fees EXCEEDED the amount of interest the investment paid out. We pointed this out to the young guy
in a tie from the bank. He was obviously not prepared to have some one actually read the brochure he had. He mumbled
something or other and said he'd get back to us. I told him that he was under no circumstances to get back to us, and
asked him twice if we had made ourselves clear. I also explained to him that we had friends in town, one of which was
a sitting judge on a court that hears cases of financial fraud, and the other of which worked for the BKA, the German
equivalent of the FBI, and asked if he had offered his scheme to either of them.

Apparently not, and indeed, he did not bother us again.

[Statistical]

33. So bank collected on a loan after 6 months of non-payment. That is a "scam"? Really?

Per story:

After several rounds of calls and faxes to prove she graduated in May 2009, not December 2008, as the bank believed, and a last-ditch application for a deferment, she thought things were settled. Then in January (2010), the bank apparently wrote off the loan, meaning it was sent to its collections department. She began receiving bills for the total amount, plus interest and fees: $11,338.60.

By April 1 (2010), the Hugheses’ checking account showed the bank deducted $140 in overdraft fees, even though it still held $4,302. The next day, the bank registered an “account transfer, zeroing out the account, and then charged $245 more in overdraft fees.

Timeline:
Graduation: May 2009
Grace Period: May-Oct 2009
First Payment Due: Nov 2009
Second Payment Due: Dec 2009
Third Payment Due: Jan 2010
Loan Charged Off: Jan 2010 (after 3 missed payments)
30 days after Charge Off: Feb 2010
60 days after Charge off: Mar 2010
90 days after Charge off: apr 2010

The bank seized funds 180 days after first payment was due, almost a year after graduation. One year after graduation she hadn't made a single payment (because she "thought" she was in Grace period) and kept $4000 in the same bank.

The bank seized the money to pay her debt and she feels "scammed"? Really?

Someone remind me why I should care. I manage to pay my student loans. Even when I was delivering pizzas part time (2 days a week) because I lost my job I still made payments. I called the bank and they converted the loan to a graduated loan to reduce payment amount (yeah I know I will end paying more in interest). I borrowed the money and I am paying it back. Pretty simple concept.

[ProdigalJunkMail]

34. I hope the degree wasn't in finance or mathematics... n/t

[depakid]

73. "Someone remind me why I should care."

Maybe for the same reason that you care about due process for your precious guns.

[tammywammy]

81. +1

[trekbiker]

93. exactly!

what the hell ever happened to personal responsibility in the country? This person is an idiot plain and simple. She had $4,000 in the bank and was not making payments? Buying pet food? The way I was raised if you borrow and owe that is the NUMBER ONE responsibility. I would work a second job, live on bread and water, cut down any and all expenses to make sure I could pay my debt obligation. I'm no fan of banks and have always used my credit union for loans, etc., but the big bad banks is not the issue here. The issue is how clueless, how lacking in basic personal responsibility this person is. I dont care what the excuse (short of catastrophic illness or death), you always pay a debt.

[Uzybone]

41. I hate the banks. I am going to withdraw all my money from banks

who is with me?

[Statistical]

44. Did it year ago.

Credit unions or in my case USAA (member owned, no shareholders) is the way too go.

[Robb]

61. How do you like it?

PM me if you want, or post here. Just curious, I've had car insurance and a credit card with USAA forever, and have been thinking about the banking aspect.

Although that would violate the bank-and-credit-with-the-same-people rule, I suppose. :D

[Statistical]

64. I got no problems with having everything with USAA.

Just if I ran into hard times I might move my money. :)
You know if I stiffed them on a loan for 6 months maybe on month 5 I would consider moving my big-ole pile of cash to another bank.

Seriously though, USAA is great bank.
Obviously they don't have any ATM but you can use any ATM for free and they reimburse you the ATM owner fee.
So if I pull $50 from a BofA ATM and BofA charges $2. USAA charges nothing AND reimburses the $2.

If you have credit card with them you can use "deposit @ home". Scan any checks to deposit and they apply them to your account same day.

If I overdraft a check they will apply it to my USAA credit card without any fees or penalties.
Obviously it counts as cash advance but I only used it once. Paid the credit card advance back in like 4 days. Total cost was something like $0.18 in interest charges.

Interest on all accounts. Online banking. Free Billpay.
Honestly I would stay with USAA bank even if they charged for it.

Best thing is the customer service. If you use USAA for other stuff you know it is like going back in time 30 years. You know when companies use to actually care about service and customers.

[Baalath]

78. USAA is my bank too.

But they aren't an option for everyone.

[icee]

92. I recently transferred all my investments to USAA. They are

a great organization and if you are in the military like I was, you can get good discounts on stuff. As far as your explanations of the Wells Fargo offset to collect their money, I have to agree with you. It appears the borrower never made a payment on her college loan. Wells Fargo gave her ample time to begin payments and may have worked with her had she been having troubles. This time the villain was probably not the bank. I bank at Wells Fargo. I don't like them for other reasons. But sometimes the devil you know is better than the one you don't.

[whopis01]

90. Don't think that USAA wouldn't use right of setoff

They make it fairly clear that they reserve that right in their disclosures.

From their depository agreement:

31. Security Interest; Setoff.
a. Account Holder agrees that the Account secures all debts
and liabilities of Account Holder to Bank, however and
whenever incurred or evidenced, including debt which may
be purchased or otherwise acquired by Bank from others,
whether direct or indirect, absolute or contingent, due or
to become due. Account Holder assigns as security to
Bank all balances, credits, deposits, monies and items
now or hereafter in the Account (with the exception of
credit card debt.)

b. Account Holder agrees that Bank is authorized at any time
to set-off the Account against Account Holder’s debts or
liabilities to Bank, without notice to Account Holder. Bank
shall not be liable for dishonoring items where such setoff
results in insufficient funds in the Account to honor items
drawn on the Account. Funds received by Bank pursuant
to its security interest or right of set-off may be applied
first to the discharge of the unsecured part of any debt or
liability of Account Holder to Bank, and thereafter to the
discharge of the secured portion, if any, of Account Holder’s
debt or liability to Bank.

c. If the Account is designated a Joint Account on the
signature card, each Account Holder agrees that Bank may
set-off the entire amount in the Account against the debt
or liability to Bank of any Account Holder on the Account,
notwithstanding the interest of other Account Holders in
the Account. Each Joint Account Holder agrees to hold
Bank harmless and indemnify Bank for any losses,
expenses and costs, including attorney’s fees, incurred
by Bank in enforcing Account Holders’ agreement to be
jointly and severally liable for overdrafts or other losses
suffered by the Bank on the Account and to permit setoff
of the Account against one another’s debts or liabilities
to Bank.

https://www.usaa.com/pdf/DaD0406_BillPay0704_SvcFee0606.pdf

[Statistical]

100. Of course they would.

However if it was my intent to not pay USAA for 6+ months (like the lady in OP did) I think I might move $4000 to another bank or simply live on cash only for a little while. :)

[freebrew]

98. I'm with you...

I'm pulling out all $35 and bury it in my backyard where it's safe...

[taught_me_patience]

43. Not much sympathy here

Loan details usually state very clearly that the bank can call the loan at anytime when you are late on payments. They had $4k in an account... they could have started paying the loan down with no problem at all.

[slackmaster]

45. Article doesn't mention the $70,000 equity loan they took out in September 2009

Maybe they should have paid off that student loan with some of the proceeds.

They have a pretty nice house. 2,300 square feet on half an acre, for which they paid $640K.

Two mortgages, at least one car loan, student loan, at least one credit card...

This isn't just a story about crappy behavior by a bank. It's also about financial dumbassery by consumers.

[Statistical]

46. Ouch even worse.

Banks suck but sometimes stupid consumers suck more.

You have to try pretty damn hard to be crappier than a bank right now. :rofl:

[HALO141]

56. Dude. They are UBER screwed.

Their only goal in life for the foreseeable future is making sure none of those go delinquent as well. Talk about a house of cards!

On edit:

I'm truly dumbfounded by the willingness of so many to just bury themselves under mountains of debt, all the time laboring under the pie-in-the-sky notion that things will just keep getting better and better. That they can maintain their existence on the ragged edge because, "hey, I'll be getting a raise in ___ months anyway. We'll be fine!"

She got a bachelors in marketing. Meh... Probably not the worst career path in this society. Then she'd expected to go after a masters in... What was it, fitness and nutrition? Seriously? Sounds like a professional student to me.

News flash - The real world's a BITCH!

[TreasonousBastard]

74. Where'd you hear that? If true, these two are skating on thin ice and no...

sympathy if they lose the house they can't afford, or the car.

(The car wouldn't be a Beemer, would it? Even better is his&hers Beemers.)

[slackmaster]

85. It's in public record data

I used to work for a company that aggregates and resells real estate data. I know where to find that kind of information.

When I read a sob story about how some innocent family got screwed by a bank, I like to take a peek to see if there is significant information that was not included in the writeup. Most of the time there is something that puts a different light on things. Usually people who get paraded out as victims of a cruel system have contributed in some way to their own problems.

This is not to exonerate banks for the kind of abuse described in this story. What that one did is reprehensible. The bank should have contacted the couple before things got as bad as they did.

Of course the story doesn't give a detailed account of what letters and phone calls the bank may have made. The real and only purpose of the piece is to garner sympathy so that more people read it, which makes advertising more valuable.

[lumberjack_jeff]

60. Credit is a hazardous tool.

Like the four-fingered sawyer, sometimes you have to learn the hard way.

[proteus_lives]

66. One lesson that was pounded into me since childhood.

No debt!, no credit cards beyond one!

Thank you dad.

I don't much a lot of money but I have no debt and a get credit score. I'm doing fine.

[McCamy Taylor]

70. Bush privatized student loans and look what happened. Banksters need to go to jail.

[Statistical]

71. That needs to be "undone".

I send my student loan payments to "Direct Loans of US Dept of Education".

If US govt is backing student loans (thus suffers loss if anyone defaults) why should the banks get the loan (which they can't lose money on).

Losses -> US govt
Profits -> Banks

There is no competition in federal student loans. Everyone qualifies, everyone has same max, everyone has same interest rate.
No reason for banks to be involved.

Have Directloans issue all future student loans.

[tammywammy]

72. If they had $4k+ in the bank, why weren't they making their loan payments? n/t

[TreasonousBastard]

75. Because they are clueless and prefer to whine about the big, bad banks.

[tammywammy]

82. Exactly

I mean if they hadn't made a car payment in 4 months the bank would have taken possession of the vehicle too. :shrug:

They sound like idiots.

[WeDidIt]

76. Lesson learned

Never have an account in any bank you have a loan through.

[slackmaster]

86. Also, read and understand every word of a contract before you sign it

:hi:

[Aviation Pro]

77. USAA....

...best and healthiest small, national bank on the face of the Earth. No ATM withdrawal fees, they pay interest on checking accounts and are available 24x7. For 27 years I've used their services and I highly recommend this wonderful institution.

[NNN0LHI]

80. I hate banks. All banks. Big banks. Small banks. Don't make any difference

I hate them all.

They will all screw you any chance they get. Took me 55 years to figure that out.

Don

[Statistical]

101. I don't think USAA would. They are member owned.

Any extra profits are returned to members at end of year.
Kinda defeats the purpose to screw your members over only to turn around give same profits back to members. :)

[lonestarnot]

83. And anyone who thinks a credit union won't do the same is kidding themselves.

[tammywammy]

84. Well, yeah

I use a credit union and I'm pretty darn sure if I didn't make payments on a loan for months on end they'd try and recoup their money. Just like if I don't make my car payment, they'd repo it just like any bank would.

[lonestarnot]

87. And you missed the point of the post apparently.

:shrug:

[tammywammy]

89. That credit unions would do the same thing as the bank did here

That people on this thread saying "Get to a credit union" are deluding themselves? Yeah I got your point. I bank at a credit union if I had a loan that I hadn't made payments on, I expect they'd so the same thing as the bank in the OP did. :shrug:

[Name removed]

106. Deleted message

Message removed by moderator. Click here to review the message board rules.

[Greenheron]

94. Same shit

I will tell you my story with these SOB's. First they offset 1500 out of our account, so we closed it and opened another account at another bank. We made the mistake of keeping my son's account in there and the bastards took his effin 2200 dollars that he had saved up for a car. He worked 2 jobs all summer so he could get a car for college. The reason that they were able to do that was because the account, which was opened up when he was a child had my wifes ss# associated with it. So my lawyer calls them and pleads with them to give my son back his money and they pretty much said eff off. Well congratulations Walkalloverya for teaching my son such a valuable life lesson that will only set to bite you in the ass in the long run. You assholes have no idea how long It took me to have my son buy into the idea that it was good for him to have to buy his own car rather than to have his parents do it for him.
Fuck you Wells Fargo! and that God Damn horse drawn carriage you rode in on.

[trekbiker]

96. let me get this straight....

your son lost his hard earned money because you could'nt pay YOUR debts?? And you blame the bank? WTF??

[aquart]

99. As I recall, this was also a standard Bear Stearns practice.

Because they were a clearing house for many brokerages, they would empty the account you held with one brokerage to pay a debt, margin call, whatever, at another brokerage.

[Name removed]

102. Deleted message

Message removed by moderator. Click here to review the message board rules.

[Statistical]

104. Where did you get $1000 a month from? n/t

[Name removed]

105. Deleted message

Message removed by moderator. Click here to review the message board rules.

[Statistical]

111. That wasn't the monthly payment. Offset is up to 100% of loan amount.

She owed $10,000 The payments weren't give but figure 6% interest that would be more like $70 to $120 a month (depends if it is 10 year or 20 year note).

Once you default an offset by the bank it up to 100% of loan amount not just past due amount.
If she had $6000 they would have taken $6000. If she had $9000 they would have taken $9000.

On edit: Tombstoned. That didn't take long.

[JVS]

112. This is why you gotta keep the stash in cash.

that's the only way you can keep hostile entities out of your business.

[HALO141]

114. Sure, but have you actually tried living on a cash only basis?

I've done it and it's a monumental pain in the ass, not to mention expensive.

[katty]

115. so much citizen abuse across the board-people need to be

very aware that anything can happen with the concentrated power that is held by gov+corps - the ACLU and other groups of same can only do so much-they are overloaded.

[JDPriestly]

117. Watch out when banks buy each other out.

The document you signed when you obtained your checking account may contain all kinds of surprises.

The bank should be required to warn people about this -- not in writing but orally, before any such document is signed. People do not understand what this means.