Bank Setoff Archives - Bailey & Galyen Bankruptcy Law Firm

30 Aug

Your Bank Can Take Your Money, No Questions Asked

Life can be stressful in our modern world. Add debt problems to the everyday stress and it can become terrifying. While not being able to pay your credit card bills, your medical bills or any of your other debt is bad, imagine waking up one morning and finding out that every last dime you had in your bank account is gone. Your bank can take all of the money you have in your bank account without any warning if you owe the bank money for a credit card, car loan, mortgage or any other debt. This is called the right of setoff.

A bank’s right of setoff is ancient, going back as far as the Roman Empire. The theory behind the right of setoff is that the bank has a lien on all of a customer’s property that is in the bank’s possession for the amount due to the bank from the customer. A debtor/creditor relationship is created when a customer opens a general depository account with a bank. Such a bank account constitutes a debt where the bank is the debtor and the customer is the creditor. When the customer takes out a loan with the bank, such as through a credit card, the bank becomes a creditor of the customer. It is this mutual debtor/creditor relationship that gives rise to the bank’s right of setoff.

Before a bank can exercise its right of setoff, the debt owed to the bank by the customer must have come due. If a bank has a right of setoff against a customer’s deposit, that right survives the customer’s death and continues against the decedent’s personal representative. A bank can also exercise its right even when you have filed for bankruptcy. This right is one of the few exceptions to the protection of your assets provided by bankruptcy. Unlike normal setoffs, the bank cannot simply take your money. First, the bank will freeze your account and then ask the bankruptcy court for permission to take the money.

The lesson here is to close any bank accounts you might have if you owe that bank money and you cannot pay the debt. It can be troublesome to do this given that many of us have automatic deposits and/or automated bill pay. But going through the aggravation of changing accounts is far better than going to buy groceries and finding that all of your money is gone.

27 Jul

And Now, Speaking on Behalf of Big Insurance: The Texas Supreme Court By Steve Sanderfer

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Uncategorized Bank Setoff, bankruptcy attorney texas, banks taking money, close account owe bank, credit card bills, credit company garnishing bank account

Earlier this month, the Texas Supreme Court once again cast its arms around Big Business and shoved Texans out the door.

Not so long ago, if you were the victim of an accident wherein medical bills were incurred you could present the total amount of his bills to a jury even if your insurance had paid the majority of those bills. This was fair. After all, one of the elements of damages that you are entitled to is pain and suffering. One way to convey how much pain you suffered is to show the amount of bills you had to pay to not have that pain anymore.

But that has changed. The Texas Supreme Court has ruled that the only bills you can present to a jury are the ones you still owe.

Let me give you an example: Let’s say that you are the victim of an accident wherein your medical bills are $100,000.00. Let’s further say that you were responsible enough to have medical insurance (which, by the way, you paid dearly for because medical insurance is not cheap). In our example, your insurance paid $90,000.00 of your bill and has a lien to get reimbursed of $10,000.00.

The Texas Supreme Court has ruled that the only amount you can present to the jury is $20,000.00 (the $10,000.00 left over from the original bill plus the $10,000.00 insurance lien). Will $20,000.00 give the jury an accurate picture of how injured you really were? No. So, whatever pain and suffering you would have received is now likely reduced by a large amount.

But let’s take this a step further. Under this new law, the person who hit you and caused the accident, caused you to incur medical bills, caused you to lose time from work, and caused you the pain and suffering now benefits from YOUR insurance.

Yep, the person who slammed into you AND his insurance company get the benefit of all those premiums that YOU paid. The bills HE caused are reduced by the insurance YOU paid for.

It is as if you are being punished for being responsible enough to carry insurance.

And here is a head scratcher: On one hand, we have Federal Government trying to force everyone to buy insurance while the Texas Supreme Court says, yes, but you better never use it in car accidents!.

Excuse me, Texas Supreme Court, but your bias is showing. Again.

14 Jul

THE US SUPREME COURT IS “MENSING” WITH YOUR LEGAL RIGHTS

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Uncategorized bank account depletion, bank freezing account, Bank Setoff, GMAC, laws, reorganize, retirement

The US Supreme Court correctly held in its 2010 decision in Wyeth v Levine that state tort laws do not conflict with federal law and can be used to hold the pharmaceutical manufacturers accountable for the serious injuries and damages caused by their dangerous drugs. The legalese for the legal issue made the basis of that decision is preemption: Are claims brought on state tort laws inconsistent with and therefore preempted by federal law. The Court recognized that the FDA could not possibly shoulder all of the responsibility for determining the safety of a prescription drug during the new drug approval process. It further recognized that tort laws were not inconsistent with the federal laws and regulations that the FDA operates under, and those laws play a very important role in determining the safety and effectiveness of dangerous drugs that the FDA approves. After all, the only information the FDA has to make that decision comes from the drugâs manufacturer. No comfort level, there.

In June, 2011, the same US Supreme Court in Pliva Inc. v. Mensing held just the opposite for the manufacturers of the generic forms of these dangerous drugs. The Court found that state tort claims are inconsistent with and are preempted by federal law and are not permitted. This ruling is significant for a number of reasons. First, the company that develops and obtains FDA approval to market a drug (called the innovator) maintains that exclusive right for a ten year period. That ten year period can be extended under certain circumstances. After that ten year period and/or any extended periods run, the exclusivity is lost. Other drug companies can manufacturer and market the innovatorâs exact same drug under its own name. These identical drugs are called generics. Second, the generic manufacturers do not have the same duties that the innovator has in the new drug approval process to test generics for safety and effectiveness and for full, complete and accurate disclosure of all know risks of serious side effects associated with that drug; this is the sole responsibility of the innovator. Third, if the innovatorâs label for the drug is inadequate and incomplete, the genericsâ label will be inadequate and incomplete. Fourth, if your physician prescribes a generic form of a drug, or worse yet if your insurance company will only approve and pay for a prescription filled with the generic form, and you suffer a serious injuries and damages from that drug, you will not be able to file suit to seek compensation against the generic manufacturer.

Since the innovator obtained FDA approval and is responsible for the drug labelâs full, complete and accurate disclosure of all know risks of serious side effects, it appears that the patient may be able to bring suit against the innovator even though the patient ingested the generic and not the original form of the dangerous drug. The pharmacy, pharmacist, insurance company, and physicians are also left exposed by this ruling for their part in the patientâs injuries and damages. Prior to the Mensing decision, Bailey & Galyen did not included pharmacies, pharmacists, insurance companies, and physicians in cases filed against the drug companies for serious injuries and damages. The Supreme Courtâs decision now forces us to include them in the lawsuit.

While the ruling is consistent with Levine, its disservice is that it leaves the generic manufacturers untouched and unaccountable for serious injuries caused by their dangerous drugs. It puts the consumer between the proverbial rock and a hard place, with the fox guarding the hen house.

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Your Bank Can Take Your Money, No Questions Asked

And Now, Speaking on Behalf of Big Insurance: The Texas Supreme Court By Steve Sanderfer

THE US SUPREME COURT IS “MENSING” WITH YOUR LEGAL RIGHTS