My daughter took out a bank personal loan three years ago and I had to co-sign the loan due to her age and lack of credit. The bank handled the loan documentation as per normal protocol, and before finalizing asked my daughter if she wanted automatic deduction monthly from her checking account which shaved off a half of a percentage point on the rate, so she agreed.
As a side note, I use a different bank, but I am on my elderly father’s checking account as he is in frail health and has been in and out of the hospital more times than I can count over the last several years.
‘I do agree this should have been caught sooner, but I have no access to my daughter’s account and she saw payments being made on the loan every month.’
Fast forward to approximately six months ago. My father and I were reviewing his monthly expenses, we saw a deduction made for X amount and it was listed as loan payment. He has no outstanding loans so it took us quite a while to figure out what had been being taken out each month (phone calls to the bank took weeks to get an answer).
It turns out that my daughter’s loan has been paid with my father’s checking account, not my daughter’s checking account. I then asked my daughter if she had been paying the loan. We checked her checking account, but no deductions were being made from that.
The bank told us that we should have seen this sooner. They said all they could do is deduct the amount that has been paid from my father’s account from my daughter’s account. I do agree this should have been caught sooner, but I have no access to my daughter’s account and she saw payments being made on the loan every month, so she didn’t question that.
My issue, and of course my father’s issue is the bank erred in putting his account number as the checking account from which the loan was to be paid from instead of my daughter’s account. Isn’t there some responsibility from the bank to also assist in making things right?
I have questions, and you don’t need to be Inspector Poirot to answer them.
How did your father’s bank-account number appear on the loan application? Who filled it out and who, aside from your good self, had that account? That seems like a good place to start. Did you fill out the form and mix up the two accounts? Are you a co-signer on your father’s account or listed as a co-owner? If you are a co-owner, and you wrote the wrong account number, the responsibility lies with you as a co-signer on the loan. Was your daughter delinquent on the loan repayments? If so, the bank would use your bank account to repay the loan as a co-signer on the loan. If you are a co-owner of your father’s account, that may explain the withdrawals.
Are you a co-signer on your father’s account or co-owner? If you are a co-owner, and you added the wrong account number, the responsibility lies with you.
If your father’s bank-account number was not given on the original paperwork, the bank made the mistake. If that’s the case, given that your father is not a third party in this loan, the bank should absolutely make his account whole again. If a bank deposits money into the wrong account — $1 million windfall — and the person spends the money, the bank can come after that person for the money. It was not their money to spend. The opposite is also true. The money from your father’s bank account was not the bank’s to take.
Did your daughter put down your father’s account instead of her own? Your daughter said she never noticed that no money was being withdrawn from her checking account over three years? If that’s the case, she must be cash rich and would, in theory, have no problem paying your father back the money that was withdrawn from his account. Or did she notice that the loan was being repaid, did not see the withdrawals, and her account was looking mighty healthy under the circumstances, and chose either not to notice or not to act?
Somebody here dropped the ball: Your bank, your daughter or your good self.
By emailing your questions, you agree to having them published anonymously on MarketWatch. By submitting your story to Dow Jones & Company, the publisher of MarketWatch, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.
Check out the Moneyist private Facebook
group, where we look for answers to life’s thorniest money issues. Readers write in to me with all sorts of dilemmas. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.
More from Quentin Fottrell: