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30

Apr 2010

Navy Federal takes money from children

Posted by / in Before Bankruptcy / 15 comments

Last month, Navy Federal emptied out the savings account where 14 year old Tammy (not her real name) saved the money she made baby sitting.

Tammy’s mom had been out of work for nine months.  She was now two months behind on her second mortgage.  (The second mortgage was from Navy Federal.)  She just got a new job paying half of what she had been making, and she was glad to get that.  But she knew she would not be able to pay the second mortgage and still feed her children.

So Tammy’s mom came to see me about filing bankruptcy.  But she mentioned in passing that Navy Fed has helped themselves to her daughter’s savings account.  How could they do it?

First time I heard of Navy Fed doing this, I was shocked too.  But I figured out how they do it.

Most banks set up children’s accounts under the Uniform Transfers to Minor’s Act, where the parent is the custodian of the account, but the child is the owner.

Navy Fed apparently doesn’t do it that way.  Instead they set up a joint account, with the parent and the child.  This gives them right, as they see it, then to take Tammy’s money to make mom’s payment.

I think that stinks.  The child, by definition, is a child, and hasn’t agreed to co-sign for mom.  So I don’t think the credit union can pretend the little girl did.

I’ll see if I can find a judge who agrees with me on this.

The big lesson of this.  If you lose your job, take your money out of Navy Federal.  And that include’s your children’s money, too.

PS Navy Federal did back down on this when we sued them–and the little girls have their money back. May 2011

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Robert Weed has helped twelve thousand people file bankruptcy in Northern Virginia. Robert Weed is a frequent panelist and speaker at the meetings of the National Association of Consumer Bankruptcy Attorneys. He is one of Northern Virginia’s most experienced personal bankruptcy lawyers. As an expert on changing consumer bankruptcy laws, Robert Weed has been interviewed on local and national TV and quoted in newspapers across the country.

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15 comments
  • Carl H. Starrett II

    May 4, 2010, pm31 2:06 PM
    01

    A colleague directed me to this blog entry. NFCU is one of my least favorite creditors and I have 2 blog entries that might be of interest to you:

    http://blog.chs-law.com/2008/08/navy-federal-credit-union-harasses.html
    http://blog.chs-law.com/2008/09/more-harassment-of-consumers-by-navy.html

  • TiredofBeingTakenAdvantageOf

    July 3, 2010, pm31 9:08 PM
    02

    Reading this actually made me ill. NFCU is the most despicable institution, masking itself as a credit union that I have EVER heard of. One day all of what they do will come back to haunt them. I have heard some of the worst stories from military personnel and civilians alike, but this by far, takes the cake. When will the U.S. Gov’t put an end to this? Surely someone ‘up above’ has noticed this? This so-called ‘non-profit’ rakes in billions of dollars a year, but harrass the less fortunate for only hundreds or less. This is truly ridiculous.

  • Mandy Olevnik

    August 21, 2011, am31 9:10 AM
    03

    Ive been with Navy Federal for 26yrs. In the past 2 yrs they have financially ruined us. Three yrs ago we took a mortgage…that in its self was a mess as they added and unexpected fees in the thousands. One year later they increased our monthly payment(supposedly for escrow), by $200. Our childrens savings accounts were emptied by NFCU to make a payment on one of our credit cards that was 10 days late. They also took any money from our checking account without our knowing about it. This caused numerous insufficient funds that caused our account to be in the negative and hundreds of dollars in fees…
    Talking on the phone with them only made things worse.. I’m desperate to get out of this bank.

    • Robert Weed

      August 21, 2011, pm31 12:25 PM
      04

      That’s Navy Federal.

  • LB

    October 3, 2011, pm31 11:30 PM
    05

    I had to file bankruptcy earlier this year and NFCU also took what little money I had in my children’s accounts to cover a debt. I remarried and they also swiped money from my spouse’s account which had absolutely nothing to do with my account but as I was a co-owner on his account, they helped themselves. The only positive thing I can say is the local branch manager was very empathetic. I will never recommend them and I had done business with them for almost 17 years. Had a great track record, paid bills on time but unfortunately my ex and I divorced greatly changing my economic status. Being as how I had great credit for a very long time… the majority of the bills were in my name. Therefore, I was the unfortunate one. I tried to work something out with them, but they did not want to work with me. I feel very badly about having to file bankruptcy because I know it is no one else’s responsibility, but somehow I have no sympathy now for Navy Federal due to the way I was treated.

  • TJ

    November 1, 2011, am30 11:48 AM
    06

    I am also filing chap 7 bankruptcy due to my pending divorce. I have a mortgage, visa cc, and auto loan with NFCU, and currently the mortgage is almost two months past due. My bankruptcy lawyer recommended that I shouldn’t waste money if I couldn’t afford to make the mortgage payment. I have moved most of my money out of my checking/savings accounts and I pay my auto loan and visa cc from an outside institution. Is my money safe outside of NFCU???

    TJ

    • Robert Weed

      November 1, 2011, am30 11:56 AM
      07

      Your bankruptcy lawyer sounds like he is giving you good advice.

  • JF

    April 22, 2012, am30 9:52 AM
    08

    Filing ch 7 soon. I have cc 1st and 2nd mortgage with NFCU. I am behind on both mortgages about 4 months. Have anything improved with them? Will they work with me on getting current? I want to stay in house. 1st is underwater.

    • Robert Weed

      April 22, 2012, pm30 4:42 PM
      09

      JF:

      I hardly ever see Navy Fed on mortgages, so I really can’t give you even a guess.

  • Justin Havard

    October 16, 2012, pm31 1:45 PM
    10

    Navy Fed took funds from my VA disability payment pay delinquent credit cards. Do I have any recourse from this?

    • Robert Weed

      October 16, 2012, pm31 6:08 PM
      11

      Justin:

      I don’t know of any in Virginia. Maybe your state would have a law that might cover it. sorry.

  • Roxanne

    April 8, 2014, pm30 10:42 PM
    12

    I filed Chapter 7 and was granted full discharge in November 2013, including the credit card and 2 mortgages I had with Navy Federal. Just today my son called to tell me that Navy Federal took all of his money he just transferred from checking to savings. When he called to ask what happened, they said that since I was a co-owner on the account, the bankruptcy division of Navy Federal took the money.

    First, this is a violation of the automatic stay. Second, it’s a violation of discharge, Third, it’s a violation of bankruptcy laws in Virginia. I am planning on sending them a nice letter, then if they don’t return my son’s money, I will sue them.

    They are the worst and I’m sick of all the commercials they have touting them as being so good to our military. Makes me sick.

    • Robert Weed

      Robert Weed

      April 9, 2014, am30 9:57 AM
      13

      Roxanne:

      Go get them! Even for Navy Fed, that’s a new low!

  • Jeffrey Schmidt

    October 19, 2015, pm31 9:15 PM
    14

    The same thing just happened to a friend of mine. They emptied both her kid’s savings accounts, ages 6 and 7, to pay for falling behind on payments. I know the debt isn’t related to credit cards, most likely a student loan. She lives in Virginia Beach. Does she have any recourse to get the money back?

    • Robert Weed

      October 21, 2015, am31 10:17 AM
      15

      Jeff:

      Well she can sue Navy Fed on behalf of the kids for “conversion.” I did that, no charge, for my bankruptcy client because I HATE it when companies do illegal stuff to my customers.

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