After doing a bankruptcy for her mom, we helped Tammy sue Navy Federal.

Back in 2011, Navy Federal emptied out the savings account where 14-year-old Tammy (not her real name) saved the money she made babysitting.

Tammy’s mom, Jessica, needed to file for bankruptcy because she 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 all her debts and still feed her children.

When she came to see me about filing for bankruptcy, Jessica mentioned in passing that Navy Fed had helped themselves to her daughter’s savings account.  How could they do it?

I was shocked.  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, 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.

So we sued; and Navy Federal agreed with us. They gave Tammy her money back before the court date.

So take your money out of Navy Federal.  And that includes your minor children’s money, too.