Anonymous asked in Business & FinancePersonal Finance · 8 years ago

Bank rediverted funds from frozen account?

My son gets SSI, on 7/1 they tried to deposit funds into my chase account but it was frozen, so chase moved it to another account that was overdrawn without consent. They wont send the money back to dept of treasury. I thought when an account was frozen nothing could be processed in or out. So how could they move the money at all? Shouldnt they have send it back?


Yes bank account #1 was and is frozen because it had fraud on it, someone broke into my car and stole my checkbook. I opened bank acct #2 but things were coming through and and old balance carried over from acct#1. So then #2 became overdrawn. Social Security only has #1 on file. The deposit came in on 7/1 they only had auth to deposit into #1, the bank instead of sending it back, just reallocated it to #2. without consent from me or SSA to reallocate. They said they wont reverse it but wrote a letter for me saying that SSI can request the money back and they'll send it. They acknowledge that it wasnt the right account for the deposit to go into.

1 Answer

  • Reena
    Lv 7
    8 years ago
    Best Answer

    Let me get this straight:

    You have at least two known accounts with Chase and the SSI payment is set up as direct deposit to Account No. 1. Account No. 1 is "frozen" for unspecified reason and therefore the money can not be deposited into this account... But there is Account No. 2 on which you owe money to the bank.

    So the bank holds funds that came in your name and benefit and at the same time you owe money to the bank.... and that is where a little known clause comes into play that when you owe money to a bank from an overdrawn account they can take incoming funds and funds from other accounts you hold with them to pay off what you owe them.

    And that is what they did. They took the SSI payment and put it in the account that is overdrawn and that money automatically paid down the balance that you owed to the bank.

    Basically what they are saying is this: You took money from the bank that wasn't yours (the overdrawn bank account) and when they saw money coming they first took what is theirs and then put the rest into your account. If the payment wasn't big enough to cover the overdraft then it went completely to pay off what you owed. And that... is legal because their argument is that you already spent the money without permission and they are just taking back what is theirs.

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