repaying a loan that was discharged

[searchertwin]

What is the name of your state? MO

My son filed bankruptcy nearly six years ago. I wrote him a check from my personal checking account and bank refused to cash the check and hand over the money to my son. They stated that if they did they would take the money and apply to the loan at the other bank where my son had a loan that they declare on bankruptcy. My question is..can the Bank take the money and apply to a loan that was discharged? My son had cashed numerous checks from me in the past and this was the first time this had happen.

[bigun]

Originally Posted by searchertwin

What is the name of your state? MO

My son filed bankruptcy nearly six years ago. I wrote him a check from my personal checking account and bank refused to cash the check and hand over the money to my son. They stated that if they did they would take the money and apply to the loan at the other bank where my son had a loan that they declare on bankruptcy. My question is..can the Bank take the money and apply to a loan that was discharged? My son had cashed numerous checks from me in the past and this was the first time this had happen.

No they can't take the money and apply it against discharged debts. They are not even supposed to ask for money.
This sounds like, your bank merged with another bank where your son had a loan go bad. If that's the case, they can refuse him service-they just can't try and collect.
Either, you cash the check yourself or, your son needs to open an account at another bank.

[Gregeney]

Originally Posted by bigun

No they can't take the money and apply it against discharged debts.

Hmmm. I've never felt sure about that. The right to set-off is something I've never personally had to deal with. I usually advise people to switch banks if they discharge any debt with their current bank.

(I'm assuming "other bank" means a different branch of the same bank)

see: [url]http://www.usdoj.gov/usao/eousa/foia_reading_room/usam/title4/civ00066.htm[/url]

Extracted from paragraph J:

Setoff After Discharge. A creditor may setoff a prepetition debt after discharge without violating the statutory injunctive provisions of the Bankruptcy Code.

This is consistent with the principle that, although a discharge extinguishes the personal liability of the debtor, discharge does not extinguish the actual debts. Discharge of the debtor does not eradicate in rem liability which may exist against assets, including monies.

Nonbankruptcy courts have concurrent jurisdiction with the bankruptcy court to decide whether invocation of a postdischarge setoff right violates the bankruptcy discharge.