I have a checking account, savings & unsecured consolidation loan of about $8,000 through my onlt bank. Recently I have been going through the process of a debt re-payment/consolidation service and they told me not to pay any of my debts that they are trying to negotiate including the one above.
So it has been 1 month that I have not payed the above loan through my account, on Friday I tried to order a pizza with my debit card and the card failed authorization, so I paid cash. On Saturday I tried to get money out of my checking account with my debit card and it said "ineligible transaction."
So on Sunday I am pretty much sure that my bank has frozen my funds.
Now is that legal? I only use my debit card and rarely carry cash anymore and my credit cards are all maxed out, so this weekend was very difficult and embarassing in that I had to borrow funds and cancel plans because I had no access to my money.
I wish I could sue my bank to show them a lesson, but I am not sure whether I have a case or not.
Also, over the past month the bank has called me several times and left messages to call them, but never leaving any messages about freezing my account, nor have I gotten any snail mail about freezing the account if I don't pay.
Note: I am going to call the bank to verify the hold and I am going to find my original loan documentation to see if there is any indication on this practice in there.