Beware of Bank Set Offs and Credit Union Seizures

Services for Real Estate Pros with Law Offices of Louis J. Esbin

Here are Three Facts Every Client Must Know:

1. If you bank where they borrow, the bank will seize funds as a set off, even if you file bankruptcy.

2. When a Bankruptcy Case is filed, certain banks, such as Wells Fargo and Union, will freeze accounts as a custodian of the account. They will not release funds, even though checks may bounce, until further ordered by the court or they receive a No Asset Report from a Trustee.

3. Now, credit unions seem to be getting very aggressive about "popping" cars when members fall into default on credit cards and even home loans, even though car payments are current. They do so based upon the cross-collateral language in the car loan and mortgage (or note and deed of trust) documents. And, so, clients must be admonished that even though they may be current on car payments to a credit union, their car may be in jeopardy of being repossessed.

Louis J. Esbin

Law Offices of Louis J. Esbin

Certified Bankruptcy Specialist State Bar of California.

Comments (2)

Alix Pinzon
Open Mortgage, LLC NMLS # 2975 - Downey, CA

These things really do make perfect sense, although I commend you for bringing them to light.  My Countrywide mortgage fell into the hands of B of A, and then my credit card similarily fell into the hands of B of A.  Now I would never have intentionally asked B of A for scratched up dime, but I suddenly found myself deeply in debt to them.  I kind of doubt that they could have changed my mortgage terms, regardless of how I was paying my credit card.  But, since they decided to double my credit card interest rate for no reason, I found great pleasure in paying off that debt.  I intend to close that account, just to send the appropriate signal.  I hope many more people get to read your post.

Oct 14, 2009 07:20 PM
Louis Esbin
Law Offices of Louis J. Esbin - Santa Clarita, CA

Thank you so very much, Gregg.  During my 24 years as a bankruptcy attorney I have advocated one client at a time, one seminar group at a time, and now each ActiveRain reader, that they should try their best to become a "cash based consumer."  Although I too commend your attempt to send a signal, without there being a person on the other side, your signal will be heard as loud and clear as a bear doing his business or a tree falling in the woods!

Oct 20, 2009 05:25 PM