If you are in default on a loan obligation be smart. Do not to keep funds on deposit with any financial institution where you are in default on a loan, in order to avoid the possibility of the lender “sweeping” the account and applying the balance to your debt.
For example, if you have a credit card and checking account with Inland Empire Bank & Trust and have missed payments on the credit card, Inland Empire Bank & Trust will “sweep” funds from your checking account to pay the delinquent credit card balance. Most likely this will result in bounced checks, leading to bank fees and a general mess.
Chase and Pacific Marine Credit Union are aggressive with their right to take action
We find that some lenders are more aggressive with their right to sweep your account than others, but as this recession drags along it is not unlikely that all lenders will step up this form of collections activity.
In our clients’ experience, Chase will levy the checking and savings accounts to pay a credit card balance as soon as they learn of a bankruptcy filing (or even if a client mentions they are going to file for bankruptcy protection).
Credit unions, notably Pacific Marine Credit Union, will act on a clause in their service agreement allowing them to close your account if you are behind in paying a loan or have defaulted.
Wells Fargo well also hold funds until the bankruptcy is either discharged or receives a release letter form the trustee.
If you find yourself in the situation described here, it is time that you consulted an attorney about the role that bankruptcy can play in your financial recovery. Contact us for a preliminary consultation today.
