Sunday, August 22, 2010

Bank Charges

Your bank may deduct money from your account under certain circumstances. Suppose you have an auto loan with the same bank where you have a checking account. If you don't make a monthly loan payment, the bank may be able to deduct the payment from your deposit account. The bank's right to divert money to cover a debt is governed by state law, which can vary significantly from state to state. If your bank has the right to take funds to cover money you owe the institution, this right is probably noted in your loan contract. Some state laws require the bank to give you advance notice before taking the loan payment; others don't.

There also are times when a court will order a bank to freeze a customer's account so that funds can be used to pay another creditor or for child-support or back taxes. In these situations, the customer will be notified before any money is transferred out of the bank, so that he or she has a chance to contest the matter in court.

A court also can order your bank to open your safe deposit box. Robert Patrick, another FDIC consumer law attorney in Washington, says this often occurs if the person renting the box dies and the executor of the estate doesn't have access to the box. Other examples, according to Patrick: If law enforcement authorities convince a judge that the box contains evidence of a crime. If someone claiming you owe money gets a court order to see whether the box contains anything of value. ("Of course, you'd first have the opportunity to show the contents of the box voluntarily," adds Patrick.) Finally, the bank may need to open the box to turn unclaimed property over to the state, in much the same way that dormant savings and checking accounts are handled.