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Business Debt/business credit card debt

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Expert: - 8/5/2009


Question
QUESTION: I had a bank of america business credit card that I could not pay.  My partner and I have a joint checking account with bank of america.  I have been on welfare since November 2008.  On July 21st without our knowledge bank of america debited all the money from our account and left us with $0.72 and left us overdrawn by $100.00 and some $200.00 in overdraft fees. Few days after we receive a letter saying they have exercised their right and set off against our account for the debt I owed in connection with the business credit card...I live in California...Could they do that without any warning, judgements or anything...thank you

ANSWER: Tragically, the answer is yes.

This is not the first time that I have seen this happen and it is based on some tricky loopholes.  You were actually notified, but it is in the fine print on one or both of the accounts (a – the credit card and b- the bank account).  
I never get a credit card from a bank with which I have a checking or savings relationship for this very reason.  However with the bank mergers that is getting harder to avoid.
In your case -
You should be able to challenge the overdraft fees, or at least have all eliminated except one.  However you will not be able to avoid the negative account balance.  
In addition, once you have corrected the situation you should demand that they correct your credit report with all the agencies.  Then feel free to take your business elsewhere.

Sorry, I wish I had better news.
Best of luck
Michael

---------- FOLLOW-UP ----------

QUESTION: Even if the money banked is welfare money?

Answer
Correct.
Because this is a general purpose account there is no way to identify the source of the funds once they have been deposited, nor any restrictions on the use of funds outgoing.

Again, I know this is not the answer you want to hear.  The only approach you have is to challenge the fees.

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Michael Fay

Expertise

My focus and specialty is in credit, so that the risk of the debt itself is minimized. This means understanding it, predicting it, and helping to correct it. Having worked in contracts & credit, I have also worked with all of the related documents such as Guarantees (personal and corporate), and Security Agreements (aka UCC’s or “liens” – but I caution you in using those interchangeably).

Experience

I have a broad background with more than 15 years in the credit industry. Ten years with Dun and Bradstreet, first as a field reporter creating reports, then in customer service, finally I served as the credit manager designing risk models for many national and international customers through D&B’s Outsourcing function. Five years with another publicly traded firm where I created the credit department and then served as credit manager for North America. At both companies we used both business and consumer data. You probably know that both business and personal credit have scores; what you might not know is how many different types of scores there are. I am familiar with and have used many different scores in each. Also be aware that each credit type (business & personal) is unique with different processes and different time frames. I have served on the board of directors for companies in many states and still serve in some capacity in a few. I contribute to credit publications and work with the non-profit arm of the SBA called SCORE.

Organizations
ACA International * NACM * Credit Risk Managers * SCORE (SBA)- Counselors to America’s Small Business * Payment Card Industry Network * PaymentSource.com * D&B Alumni * Psi Chi, National Honor Society for Psychologists

Education/Credentials
BIS in Business and Psychology, University of Minnesota * MBA is still in progress (on-line)

Awards and Honors
State of Colorado - State finals in Accounting and Advanced Accounting. * D&B Leadership Winner (3 times) * D&B Leadership Finalist (3 times) *

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