unauthorized loan payment

[avertjordan]

I live in Texas, my husband took out a loan with our bank at their suggestion to payback service fees and 2 checks that we feel the bank paid twice, but to date are unable to prove. This loan is at the same bank where we have our business checking account. Our loan was past due for 2 payments and on Friday, 19 Oct. the bank chose to debit our checking account, after our deposit posted for 4,500.00 to cover expenses and payroll, for the full amount of the loan, over 3,000.00. Of course this will result in numerous checks being returned unpaid, bank fees for returning the checks unpaid and possible legal action by our local county attorney. Our bank did not notify us of this transaction prior to or after the fact. We found out on Monday, after receiving an overdraft notice that lead us to ask about the balance of our account which by this point was only 45.00. Can our bank simply draft the full amount of our loan? Don't they at least need to contact us? Is the bank in any way responsible for all the checks that will be returned unpaid? We are unable to cover the checks left outstanding by their actions. Is there anything that we can do?
There are numerous other occurances with our checking account that include, bank statements that are short a few checks, return notices and overdraft fees added to our account on checks cashed at the window and two checks that were originally returned unpaid, we purchased cashier's checks to cover the returned check and then later found that the returned check had been redeposited and paid by our bank.

 

[JETX]

Q1) "Can our bank simply draft the full amount of our loan?"
A1) Very probably yes. You need to read your loan papers and you will see that there is a clause in there that allows them to do automatically deduct the loan from any available deposit funds in the event of failure to pay.

Q2) "Don't they at least need to contact us?"
A2) Nope.

Q3) "Is the bank in any way responsible for all the checks that will be returned unpaid?"
A3) Nope.

Q4) "We are unable to cover the checks left outstanding by their actions. Is there anything that we can do?"
A4) Not at this time. The only thing you could have done was to make sure that the loan was being paid as agreed.

As for any other disputes with this bank, they are separate to this issue and need to be resolved on their own.

 

[cyb]

secured or unsecured?

Was this debt secured or unsecured? The reason that I ask is that I just had a very similar thing happen to me on an unsecured personal loan that I cosigned for. I read the fine print and from what I could tell, that clause is for secured loans, not unsecured. Am I right or wrong?

 

[JETX]

Both. This debt would be in fact secured by the existence of a current account at the bank. That 'security' allows them to recover the claimed funds directly.