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Suppose someone takes a personal loan from a bank and defaults on a payment.

Can the bank unilaterally take money from other accounts he may have at that bank to make the required loan payments?

Can the bank take money from the accounts of blood relatives (e.g., spouse or child) to satisfy the loan?

  • The latter, certainly not. The former, probably not without a court order. – phoog Nov 5 '15 at 23:03
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Can the bank unilaterally take money from other accounts he may have at that bank to make the required loan payments?

Unilaterally, no. However, there is probably a provision in the loan agreement which has bilaterally agreed to it.

Can the bank take money from the accounts of blood relatives (e.g., spouse or child) to satisfy the loan?

Generally not. An exception may apply where the person has stood as a guarantor of the loan; again what they agreed to is in the guarantee document.

  • Actually, my research suggests that they may have this unilateral right (to charge the debtor's account). It's called "set off" and it comes from common law. Banking regulations may impose limits on the bank's ability to do it, though. I will try to add an answer if I find some good references. – Nate Eldredge Nov 6 '15 at 14:16
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    @NateEldredge I believe the right to set off is a creature of the contract- you don't have that right unless it is explicitly in the contract. – Dale M Mar 7 '16 at 19:21

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