Can a credit union freeze my accounts because I am just 10 days late on loan payment?
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Can a credit union freeze my accounts because I am just 10 days late on loan payment?
I have been with them for over 10 years, and have a very good history of paying loan payments each month. I am barely 10 days past due, and they have frozen both savings and checking accounts. I attempted to deposit my paycheck, which was for more than loan amt due, and wanted a small amount of cash back on it, and they wouldn’t give me any cash at all. So I wanted my paycheck back, because I needed money for gas, etc. and was afraid to give it to them because of the frozen accounts. Is this legal and normal practice? It seems wrong, and a bit harsh.
Asked on February 18, 2011 under Bankruptcy Law, Colorado
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 13 years ago | Contributor
What the credit union has done is probably legal. First, the agreement(s) between you and the credit union probably provide that they may do this in the event you default under your obligations. Second, even if the agreements do not specifically say this, they 't may not have to provide services to someone who is in default on his or her obligations. It may be harsh, but they probably do have the right; you should, however, both check your agreements with them yourself and also ask them to explain the legal basis for what they've done.
Also remember these things:
1) Your prior history with a company or lender means nothing. They are not obligated to give you any better treatment than someone who just opened an account.
2) Being 10 days late is, legally speaking, as bad as 10 months late--once you miss your obligations, you are in default.
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