Suddenly, bank account was gone

AJC ^ | 5/1/10 | Lucy Soto

[Kartographer]

When Hope and Matt Hughes stopped for supplies at a pet store last month, they thought the trouble with their debit card was just a glitch. But it turned into a financial crisis.

They quickly discovered that their bank, Wachovia-turned-Wells Fargo, had deducted $4,059.82 from their checking account, wiping it out.

It was no glitch. It is called the right of setoff or offset, a long-accepted practice dating to early English common law.

[Lancey Howard]

Jay Lawrence, Atlanta spokesman for Wachovia, which became a Wells Fargo company in 2008, said the bank uses the right of setoff as a last resort. Lawrence didn’t want to comment about the Hughes’ case except to say the bank’s records don’t support some of the Hugheses’ accounts. “We don’t do this without lots of attempts to communicate with our customers and try to work things out,” Lawrence said.

Deadbeats. Guaranteed, some scumbag politician will run with this story and push for a law that further protects deadbeats. And, as always, normal, responsible people will pay the freight.

[Lancey Howard]

This explains why banks offer 1/4% lower interest rate on loans when you sign for automatic payment deduction from an account at that same bank.

[ladyjane]

I recently had Chase forgive $10,000 on a credit card where my wife owed 13,000.

Is she going to pay it back?

[dfwgator]

Does the forgiven amount count as income for tax purposes?

[Larry381]

Does the forgiven amount count as income for tax purposes?

Nope, although I fully expected it to be counted toward our income.

Even if it had turned out otherwise it would still be OK with me. It took me a little over a year of sending the bank, financial paperwork, social security verifications, medical verification, birth certificates, hospital records and other paperwork before they agreed. Then on top of that, Washington Mutual went out of business and Chase took over their accounts and I had to resend all the paperwork again. Believe me, I'm not complaining and it turned out OK in the end thanks to Chase.

[pallis]

You are correct. We had notice that we owed the IRS, but we contested it, and without a conclusion to that, and without any hint that they were going to drain our bank account, they did. When it happened I was in Texas trying to salvage a business that a partner was struggling with, and my wife and kids were in New Mexico. They woke up one morning completely broke, and I was a thousand miles away not much better. Thankfully, I had just sold some property in Texas, and I picked up a construction contract at the same time. We only had to go penniless for a month . It was an eye opening experience. ...When I say that the IRS didn’t pay any interest I might be wrong. What they didn’t pay was the 100 percent fine they had added on. This was back during the end of Carter’s debacle or Reagan’s first year, that time frame.

[NTHockey]

This was the same people who admittedly laundered money for drug dealers. They got off with an apology.