This dirty little secret uncovered by the good folks at Phoenix, Arizona’s 3 On Your Side program scared the dickens out of me, as it should you.  Now that you’ve gotten your budget scratched out and held in your tight little fist, wouldn’t it be incredibly devastating if you suddenly lost all the money you had in your checking and savings account?

According to the news report, Wells Fargo emptied out the bank accounts belonging to an individual because they found out that individual was facing foreclosure.  The gentleman held a second mortgage with Wells Fargo, and when they learned of the foreclosure, they waited for a large deposit to show up and withdrew every last penny out of two accounts.  This was done without notice and without litigation.

According to a Wells Fargo email to the Arizona news program “…state and federal law gives financial institutions the right to claim unpaid and past due amounts owed to them…” and the email also states that “…this is a common industry practice…”

The words “common industry practice” made me sit up and take notice, as it should you.  What if I  miss one or two mortgage payments because of a hardship like a medical emergency?  Could they, would they, take the money, leaving me without the means to handle the emergency?  That’s scary.

This made me wonder about other consumer debt held at the same banks as your checking and savings accounts.  If you have fallen behind in your payments on your bank’s credit card, can they start taking the money out of your other cash accounts?  According to the news story, even your savings account is not safe.

I guess at this point I don’t want to guess, I want to know.  Review the policies of your mortgage company and other banking institutions that you use.  If you’re even teetering on foreclosure, get and keep your cash out of that bank.  Protect your hard-earned cash.  It would be a shame to have anything happen to it, especially now that you’re working so hard to avoid a financial disaster.

Keep a firm grip on your money and a close eye on your bank accounts.  You’re doing a great job!