can a loan co. take money from ur bank account if u gave them ur car title as collateral

I got a high interest loan and used my car title as collateral, I've got into some money issues after paying this company for at least 2.5 yrs without missing a pymt, and now that I cant pay they are threatening to serve me and saying they can take money from my bank account, I have been on disability since 2005 and its electronically put into my account every month. The car that they have the title to, was recently towed and I gave the loan company the info as to where the car was and that it was not in good running condition and told them about my money issues and they could have the car. I then turned in my tag and registration on the car to the DMV. Well I got word from the towing place that the car was sent to a scrap yard and crushed. And was told that whoever had the lien on the car was responsible for it. The loan company knew where the car was the day after it was towed and even admitted to me personally that they knew where the car was.