Should You Have Bank Accounts at the Bank You Owe Money To?

Posted on Feb 19, 2015 By Grant McNutt

Florence Attorney B. Grant McNuttMost people have at least one bank they are loyal to and usually you will have multiple types of accounts with that bank.  I am sure that whatever bank you currently do business with offers you incentives and seemingly great deals to open other types of accounts with them.  The new account could be a credit card, car loan, a mortgage or home equity loan, or home equity line of credit.

This is a great opportunity for your bank to easily obtain more business from you since you are already a customer.  And, unless you dislike your bank it is very reasonable for you to take the bank up on the offer if you need that additional service.  You are probably thinking that you need that service anyway so why not use the bank that you already know and trust.

You can usually see all your accounts on one screen if you pull it up on their internet banking site and take care of your payments easier and more efficiently.  That is exactly what your bank wants you to think and feel.

If everything in your life is going great there would be no issues with having multiple bank accounts, a credit card, car loan or a mortgage and line of credit with the same bank.

Owing Debts to a Bank

But what happens once you have a financial setback?  What happens if you are unable to continue paying on one or more of the debts owed to the bank?

At this point you should highly consider speaking with one of our Bankruptcy lawyers to assess your situation.  At Bond & Botes, our affiliated offices offer free initial consultations.

The quick and easy answer to the initial question of “Should I have bank accounts at the same bank I owe money to” is “No”.  There are exceptions and at Bond & Botes we will discuss those with you.

But there are several questions you need to ask yourself if you do have bank accounts where you have other loans or credit cards and the financial setback occurs and some are as follows:

Are your credit cards cross collateralized with your vehicle loan?  If so, then you may not get your title to your vehicle unless you also pay the credit card debt in full as well.

If you are unable to make your credit card payments for a period of time, guess what? Under certain circumstances a bank can take the money you owe them from your checking or savings bank accounts.  How can the banks do this, you ask?  This process is called a “setoff” and in most situations you gave them permission to do this when you signed up for the extra credit card, car loan or home mortgage.  You might say to yourself, I did not agree to let them do that, but it is usually in the fine print of the terms and conditions portion of the documents.  They unfortunately do not point this out to you in most instances and since you trust “your” bank so well, you probably never read the document close enough to know you had given them permission to do this.

On the other hand if you have a credit card with a bank that you do not have a bank account with, the bank would need to sue you first and obtain a judgment against you before they can levy or garnish funds from your bank account.

If you have a bank account at the same bank as your credit card this is not necessary and they can just they can just take it from your bank account.   What can make matters worse is if you just wrote a check to pay a bill not knowing that the bank had already taken some money out of the bank account and then your check bounces.

Then you would then be hit with a Non Sufficient Funds (NSF) fee by the bank and possible criminal issues from the entity you wrote the check to.

Most of my clients have the same response when I advise them of this practice and it is to the tune of “Oh, my bank will never do that to me! I’ve been a loyal customer for 15 years!”  Well, at Bond and Botes we have filed thousands of bankruptcies and we can assure you that banks are not people and as such they do not have feelings.  They do not care if you have been a customer for 1 year or 10 years.  Banks are in the business to make money, so the bottom line is do not have bank accounts at the same bank where you owe money.

At Bond & Botes, our affiliated offices offer free initial consultations.  Please feel free to call one of our conveniently located offices to set up a private consultation with one of our experienced attorneys.  We will analyze your situation and help you to make the best decision possible to help you eliminate that your debt once and for all and protect your hard earned assets.

 

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