The unfortunate answer to this question is yes they can. Oregon case law permits bank’s the right of set off which enables them to take money out of your account to pay back any money you owe to them as long as you have signed an agreement giving them that right. If you signed such an agreement, it probably wasn’t when you set up the actual account but when you signed up for the credit card or took out the loan.
The sad fact is that most Oregonians don’t find out about the set offs until after the bank has taken their social security check. For safety’s sake the best thing anyone can do is use a different lending institution than the one that you owe money to as your primary bank. For example, if your car loan or credit card are through Wells Fargo and the checking account where you social security checks deposited is also located at Wells Fargo, maybe it’s time to start having the checks automatically deposited at a bank where you have no credit relationship.
If you are contemplating filing bankruptcy, you may want to seriously consider setting up a bank account at a bank or credit union where you have no credit relationship. Though few banks currently offset at the time of a bankruptcy filing their numbers are increasing so why take any chances?