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A Credit Union Can Freeze Your Accounts If You Owe Them Money

  • By: Christopher Benson
  • Published: July 18, 2013

Here is the classic example of What Not To Do.

  • Client X keeps their checking account and savings account at a credit union.
  • Client X also has a car loan and credit card with the credit union and both have balances.
  • Client X is struggling financially. So, client X “thinks” they are doing the right thing by calling the credit union in advance of the time when their payment is due just “to let the credit union know” that he was going to be a “little late” with the payments this month.

Credit Union then immediately moves all Client X’s money into the savings account, closes the checking and freezes Client X’s Savings account. Thus leaving Client X with no money for food, gas, rent etc.

Can a credit union do this? The answer is YES!

RCW 31.12.416 gives credit union unique lien rights that provides in part as follows: “A credit union will have a lien on all shares and deposits, including, but not limited to, dividends, interest, and any other earnings and accumulations thereon, of any share account holder or depositor, to the extent of any obligation owed to the credit union by the share account holder or depositor.”

So if you are having financial difficulties do not let the credit union get a running start on making your bad day worse.

Christopher Benson

About the Author Chris served on the Board of Directors for Habitat for Humanity
Seattle/S. King County for 10 years and served as Vice President
of the organization during part of that time. Read More