Hello and thank you for allowing me to address your legal question.
Yes, a bank may cancel your debit card without any prior warning, and it may also terminate your relationship with the bank for just about any reason, except for a few exceptions relating to things like race, religion, gender, disability, etc. In this particular case, the bank probably decided that you were a risk because of the NSFs (or at the least that’s a legitimate reason to terminate an account).
I’m concerned by what you stated with regard to your father’s wife, however. If the account were yours alone, then the wife has no right to remove any funds from the account. If she did so with no authority, then the bank itself may be liable to you for the damages (and cannot charge you NSF fees). However, she acted with apparent authority (for example, if she had your debit card and the PIN), then you would still be liable to the bank, but you could sue her for all of your damages (i.e. the NSFs).
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If you sue, there are a few possibilities:
The best case scenario is that the bank settles with you in order to avoid legal fees. That is not likely to happen, however, since banks have an abundance of lawyers on staff and on call. Therefore, expect the bank to fight your lawsuit. The worse case scenario is that the judge throws out your case for being frivolous, and then makes you pay the bank’s attorney fees, which could be thousands. The most likely scenario is that the judge throws out your case and doesn’t award anybody anything.
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