Home Foreclosure News: Did You Know Your Bank May Be Able to Wipe Out Your Bank Account If You’re Late on Other Loans You Have with Them?
If you’re facing home foreclosure, there’s a high probability you’re having trouble paying other bills as well, eg, your car loan, your student loan, etc. And, this is what makes what I’m about to tell you so scary.
Home Foreclosure & Your Finances: Why You Need to Be Worried if You Have Multiple Loans with One Bank
Many consumers today practice what banks refer to as “relationship” banking. They may take out multiple loans with the same institution. Namely, it’s because banks “reward” consumers by offering them lower rates on other loans (eg, car loans, student loans, home equity loans).
But this can be dangerous if you’re in financial trouble. Because of a banking law (that most consumers have never even heard of, mind you) known as the right of setoff or offset. What is it?
The Little-Known Law That Allows Banks to Wipe Out Your Bank Account — Without Notifying You First
The “Right of Offset” the legal right of a bank to seize deposited funds (eg, in your checking or savings account) to cover a loan that is in default.
So for example, let’s say you have a home loan, car loan and student loan with a bank. If you’re significantly late on your student loan, your bank can seize the funds in your checking or savings account to cover this loan.
That’s exactly what happened to the Atlanta, GA resident in the AJC.com article, “Suddenly, bank account was gone.”
Trying to Stop Foreclosure & Have Other Loans with the Bank that Holds Your Mortgage? Advice on What to Do
I guess the moral of this story is that if you’re facing home foreclosure, which means your finances are not solid, protect the few funds you have from being seized in case you have to move, pay back taxes, take legal action like filing bankruptcy to stop foreclosure, etc.
Learn more about the Right of Offset in the YouTube video below.
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Copyright © 2010 Yuwanda Black for Foreclosure Business News. Article may not be reprinted or reproduced in any manner without the express, written consent of the author.