Can a credit union freeze an account until there’s enough money in it to cover a debt that is owed to them before others are paid?

UPDATED: Sep 30, 2022

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Can a credit union freeze an account until there’s enough money in it to cover a debt that is owed to them before others are paid?

Our credit union will not allow us to take money out of my deceased father in laws accout so we can pay other bills that are owed so they stop accruing interest rates? Is this allowed?

Asked on May 2, 2017 under Estate Planning, Virginia


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 5 years ago | Contributor

It depends on the terms of his account: if the agreement(s) under which he banked with them provided that they could do this, they can. Otherwise, if they do not have contractual authority (i.e. power from terms of service, account agreement, or other agreement with them) they can't, since without such authority, the fact that they may be owed money by him does not entitle them to take, freeze, etc. his funds, any more that if you borrowed money from a neighbor and failed to return it, that he could freeze, etc. your funds.
Ask them to show you the authority by which they are doing this: i.e. the agreement(s). If there are none, you may wish to file a complaint with the agency regulating credit unions in your state.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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