Delinquent loan

may eliminate the right to counter institutions and individuals alike, who owe money to each other the ability to apply mutual debts against each other. Therefore, banks have the right to set off without notice or your prior consent.

For example, this is how the process works. Once you open a checking or savings account at a bank, the money becomes property of the institution concerned. Therefore, you are the bank creditors as soon as you start to make a deposit in the bank. The funds in your account are in control of the Bank. Although most people think this is still their money, it is actually the bank promise you that amount, and usually by the Federal Deposit Insurance Corporation (FDIC) guaranteed repayment. Occurs when you borrow money from the same bank for a loan, a mutual relationship, it allows the bank to withdraw money form your account if you do not repay the loan as agreed. However, if you take your money out of this account is the mutual debt canceled and the bank is no longer the authority on the bank account set-off.

Now here is a recent example of how the law works to offset. Lets say you have a car loan with Bank of America and a current account with them as well. If you only so happen to fall behind your car payments, Bank of America, without prior notice shall begin, to withdraw money from your account to credit to car-loan payments.

However, there are limits and rules for the bank the right to offset. Some deposits, such as those who by a trustee to a trust fund account can not be withdrawn from the bank to make payments to the overall debt. Money deposited by a company can not count on personal debts by a representative of this company.

Sometimes certain loan documents contain language allowing them to withdraw funds from other accounts with them if you fail to repay the loan.