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New Contributor
Posts: 84
Registered: ‎08-13-2012
0

Is this legal.

 So my fiancee has a secondary vehicle that is nearing the end of the loan($390.84 balance). So I tell her to call and check on the remaining balance to see how much we can send to go ahead and have it paid off.

 

 Well apparently, the bank(small town bank where we used to live, only 3 branches) decided to lump in the supposed "$610" that they claim we owe them for an old account into the loan payoff, and say they will not release the title without receiving full payment.

 

So a little back history, we moved far away from said bank. GECRB decided to double draft us one month($200, we only kept maybe 150 in there just to have it open)

we call the bank, they say there is nothing that can be done, and that we can either pay the overdraft fees, or get gecrb to reimburse us(pfttt, yea right, they just added it as a credit) so we told the bank to close the account.. They apparently did not, for 10 more months, from the $50 originally overdrafted and the $36 fee, it grew to $610 and some change somehow.

 

This seems like they are just trying to make us pay the money, it's not on her chex system reports or anything.  Even if the debt is valid, can they require payment before releasing the auto loan? What would be the best way to handle this situation? I dont think We should pay well over $500 in just inflationary fees, they dont even seem reasonable.

 

Any help is appreciated!!!




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Moderator
Posts: 9,187
Registered: ‎03-06-2010
0

Re: Is this legal.

Sounds like they are exercising their Right of Setoff. If you look at your terms and conditions when your fiancee opened her bank account it will disclose that the bank can offset any outstanding debts with any deposit account or other asset you have with the bank. This includes the car. In effect, the debt from the checking account was applied to the car loan. CU's have this same provision, but its called 'cross-collateralization'. It's the exact same process.

 

Best to put an end to it now. Pay the outstanding on both the vehicle and the account. Make sure your fiancee gets something in writing that the account is paid in full so her chexsystems or other OD databases can be updated too. They won't release the title without payment of all of it.

Moderator Emeritus
Posts: 14,868
Registered: ‎12-30-2011
0

Re: Is this legal.

Thanks StartingOver, it makes sense but I didn't know explicitly that there was legal precedent for it.

 

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Moderator
Posts: 9,187
Registered: ‎03-06-2010
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Re: Is this legal.

[ Edited ]

Revelate wrote:

Thanks StartingOver, it makes sense but I didn't know explicitly that there was legal precedent for it.

 


If you go to Google Scholar and search for Right of Setoff + Banks you will see all kinds of legal precedent. I'm not an attorney so there could be nuances in the law that I would miss, but this area is pretty well established from what I can see (as always the OP should seek the advice of an attorney about their specific situation) .

Frequent Contributor
Posts: 284
Registered: ‎07-29-2012
0

Re: Is this legal.

Look at this this way is your car worth $600 ? Pay it and make it go away.

You can try talking to bank manager for possible discount or fee removal.

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New Contributor
Posts: 84
Registered: ‎08-13-2012
0

Re: Is this legal.

Have any of you ever asked the bank to remove fees in the past? how did you approach them?

 

 




Staring Scores:Transunion-636 Equifax-618 Experian- 640 (8/12):
Current Scores:Transunion-717 Equifax-(?) Experian 726(as of 11/18/13):

Goal 760 Across the Board:







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