Legal Question in Credit and Debt Law in North Carolina

You admit that you owe the bank money. The rule is that when you owe money to the bank and you have a bank account also at that bank, if you owe the bank money on the loan, they can go on a raiding expedition and take money out of your bank account. If that causes an overdraft, that is going to be your problem unless you can somehow show that the taking of the funds was improper and that you had sufficient money to cover any checks or payments but for the overdraft by the bank or the collector.

For this reason, never bank at the same place where you have a loan. I can't believe that a collection agency did this. Debt collectors cannot levy upon bank accounts until they get a judgment so this does not sound right.

If I were you, I would not put any more money into this bank account. Since you now owe money to the bank on top of the loan payments, your husband will have to get his own checking account. You are going to have to work out some kind of resolution meanwhile. And I don't see how the bank could take out money that you don't have - so something is not right here either. The bank could have taken the $100 and caused overdrafts, but they could not apply $505 to your loan as the money does not exist. However, I would have to see bank statements to know for sure.