Why You Might Want to Stop Automatic Withdrawals
People try to stop automatic payments for different reasons. Maybe you’re trying to get back on your feet and need to manage your money better. Maybe the payday lender took more than expected. Or maybe you’ve realized you’re badly stuck in a payday loan trap.
Whatever the reason is, stopping automatic withdrawals from payday lenders is your right. You don’t have to let a lender drain your bank account.
What the Federal Law Says
Under federal law, you have the right to revoke a payment authorization. Now, what does this mean? That means you can stop a lender from continuing to take money out. It’s called revoked authorization. It’s key in fighting back against the payday cycle.
You can also contact your bank or credit union and request a stop payment. This means the financial institutions involved will block that lender from pulling funds. It’s not automatic, though. You need to act fast and follow the right and legal steps.
Tired of constant calls and pressure from payday lenders? filing bankruptcy could help keep creditors away with an automatic stay while you sort out your finances.
Steps to Stop Automatic Payments from Payday Lenders
First, contact the lender in writing. Write that you are revoking permission for automatic withdrawals from your bank account. Be precise and clear. Ask for confirmation.
Second, give a copy of that written notice to your bank or credit union. After that, you have to request a stop payment on future transactions. Many financial institutions require a written request or online form. Some may charge a fee. But the cost is generally less than letting the payday lender keep taking funds.
The third step is to monitor your bank account. Keep a close eye. If the lender tries again, your bank or credit union should block it. If they don’t, report it immediately.
Fourth, consider opening a new bank account. This is sometimes the best way to fully stop future payments. If the lender doesn’t have access, they can’t withdraw anything.
Before filing Chapter 7, you’ll need to complete the Means Test to see if you qualify based on income and expenses. It’s a key step for many dealing with payday loan debt.
What to Watch Out For
Just because you tell the lender to stop doesn’t mean they will stop. Some may ignore your request and try anyway. This is why giving notice to your bank or credit union is highly important.
Also, blocking the withdrawal doesn’t erase the payday loan debt. The lender may send your bank account to a debt collector. That’s another challenge.
Still, cutting off the cash flow can buy you some time. You get room to think. You get a chance to find debt relief options that work for you.
