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Can a bank withdraw money out of your account to settle a debt?

I have a checking account with Chase Bank and they withdrew all of my money out of my checking account. I called them and they said that I owe them money from a previous checking account that I had with another bank (First Bank of Chicago) that Chase purchased. They said I owe them $500 from the year 2005; and they will continue to withdraw money out of my account until it is paid in full. I asked them to prove this debt several times and they refused. Is this legal?
Can they withdraw money out of your savings account also?

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One Response to “Can a bank withdraw money out of your account to settle a debt?”

  1. Lil_Dog said:

    Yes. It’s called a “drag net clause.” It allows a bank to settle debts from one account by drafting a second account owned by the same bank.

    For example, say ABC bank holds your mortgage and your checking account. If you do not pay your mortgage, they can take the payment from your checking account including late payment fees. Also, you’ll get to pay OD fees when your checking account goes in the red because you weren’t expecting a mortgage payment to come out. Gotta love banks!




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