Cana credit unionreopena closedaccount without authorization and apply funds to an old debt?
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Cana credit unionreopena closedaccount without authorization and apply funds to an old debt?
10 years ago, I took out a loan from a credit union and failed to pay the entire balance off. As a result, my credit scored dropped tremendously as the credit union reported nonpayment for 7 years until the account eventually fell off my credit report and was closed by the credit union (needless to say, I have no accounts opened with this credit union). Earlier this year, I loaned a family member who banks with the same credit union $500. She reimbursed me by check, so I went to the credit union to find out if their were sufficient funds in her account. The teller asked me for my ID and took the check to verify funds. When she came back, she told me they were keeping the check, reopening the closed account, and applying the funds to the old balance. I never signed/endorsed the back of the check and when I asked for the check back, I was told they would not surrender the check to me and would draft the funds from my family member’s account immediately and apply to the unpaid balance. Is this legal? Can they reopen the account without my authorization? My family member tried to dispute the legality of having the money come out of her account without the actual person (me) she wrote the check to endorsing it. She asked for proof that I had cashed the check of which they could not furnish, but have not put the money back into her account.
Asked on August 23, 2010 under Bankruptcy Law, Louisiana
Answers:
M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney
Answered 14 years ago | Contributor
Credit Unions are not the same as banks. They are financial institutions owned by members who usually have something in common (City workers, etc.) and they are operated and managed by mostly volunteers on a Board of Directors. But they are not unsupervised. The National Credit Union Administration (NCUA) is a federal agency that has the power to form and supervise credit unions. Credit unions, just like anyone or anything public or private, can not violate the law in the transaction of its business. What happened here appears to have by-passed the law not only as against you but as against your family member. I would contact NCUA for help here as soon as you can. Good luck.
http://www.ncua.gov/Contact.aspx
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