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Creditor withdrawing funds from personal bank acct

We are closing a business due to financial losses – we are frequently obtaining advice from a trustee to be sure that we are following proper proceedure. Our cash flow is extreemely tight – but the liquidation of our assets will provide enough funds to pay our creditors. However – we are paying secured creditors and governement taxes first.

Without notice of any kind – a bank that we had an un-secured business line of credit with withdrew funds from our personal account – $3500 from one and $1200 from another. Can they do this?? This was the Saturday before Christmas – and I can’t get an answer from anyone at this bank – as the individual in charge of my account is on holidays. We had just enough in these accounts to cover our mortgage, loan payments and utilities – all due on the first of the month.

I thought that they had to follow some kind of protocol before garnisheeing a bank account.

One Response to “Creditor withdrawing funds from personal bank acct”

A licensed trustee said...

Unfortunately, if you are indebted to the bank and have missed any payments the bank has something called the “right of set-off”. That means if you owe them money on account A, but have money on deposit in account B the bank has the right to take money from B to make a payment towards A.

If you haven’t missed any payments for account A then you may be able to convince the bank to reverse the transactions – if you were over your limit or have missed any payments they are less likely to co-operate with you.

The only way to protect yourself from this kind of activity is to open a new account with someone that you are not indebted to. If you don’t owe them any money then they will have no reason to take payments from your account.