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goudah2424 · #1 07-06-2007, 08:13 AM

Before you close your bank account due to payday loans eating away at your paycheck, please read this.

Some banks have a policy regarding ach transactions that allows them to force open closed accounts if any ach transactions go through within a certain time frame after the account is closed. This can leave you owing a legal bank $1,000's and reported to chexsystems, instead of owing barely legal (or not at all legal) payday loan companies. Not a good thing. Ask your bank what their policy is on ach transactions on closed accounts before you close the account. It's best to go in person and talk to a branch manager.

If your bank does have this policy, tell them your situation. Don't be embarrassed. Take letters with you showing that you have revoked authorization for each of your payday loan companies to debit your account. Tell the bank to put your account on deposit only, an ach block, or a hard hold before they close the account. Your bank can do one of those, don't take no for an answer. This will prevent any payday loan ach's from reopening the bank account.

It'a always best to close your bank account. Leaving it open gives ways for the payday loan companies to continue to take money out. These companies have many different dba's, so blocking them won't work. They will also produce paper checks and run them through your account. Closing the account is the best way to prevent these companies from taking money out of your account.

Some state laws do allow for prosecution if you close your bank account, but that is usually in cases of fraud. But it's always best to check with your state's attorney general or department of financial institution before you close your account. You want to make sure you are not causing more heacaches!

ramj70 · #2 07-06-2007, 08:26 AM

Good advice goudah. Like you said, be honest and upfront, generally the bank will try and work with you. After all they are in the business of making money and keeping clients helps with that. Be polite and don't be rude or raise your voice.

goudah2424 · #3 07-06-2007, 08:34 AM

Absolutly! Sometimes you will get a person that will tell you the bank can't do anything. Sometimes they just don't want to help, and other times they just don't know what options are really available. Ask to speak with the branch manager.

If that still doesn't work, ask them what they do when they find out fraudulant transactions are occuring on an account. They freeze it! If they can do it for that, they can do it for you.

Ang · #4 07-06-2007, 08:44 AM

Well we bank with Chase and have had the same account for over 20 years, wasn't Chase back then but anyway, not to bring my "personal" life into this... when my hubby and I split up about 3 or 4 years ago (when all my $$ troubles started) he put a deposit only thingy on our joint account! I was amazed that i was NOT allowed into my OWN acct but i wasn't! ONLY DEPOSITS!
For what that's worth to any of ya!
ANg

polly · #5 07-06-2007, 08:59 AM

Here's an example of how closing an account in Michigan when you have a loan out with a lender (and a couple of internet lenders are licensed to lend in MI) can mess you up worse than what you already were...

Quote:

DEFERRED PRESENTMENT SERVICE TRANSACTIONS ACT
Act 244 of 2005

487.2158 Endorsement of check; returned check charge; liability for dishonored check.
Sec. 38. (1) A licensee shall endorse a check given to it by a drawer with the actual name under which the
licensee is doing business before the licensee negotiates or presents the check for payment.
(2) A licensee may contract for and collect a returned check charge that does not exceed the maximum
returned check charge determined under subsection (3) if the drawer's check that the licensee is holding in a
deferred presentment service transaction is returned by the drawee due to insufficient funds, a closed account, or a stop payment order. The licensee may only contract for and collect 1 returned check charge under this
subsection in a transaction with a customer. In addition to the charge authorized by this section, a licensee
may exercise any other remedy available under any law applicable to the return of a check because of a closed account or a stop payment order.

In Michigan that equates to 3 times the face value of the check!!! IMO Better off to let it bounce like a basketball.

http://www.legislature.mi.gov/(S(xsg20c55m2fh25etc5oc30jk))/documents/mcl/pdf/mcl-Act-244-of-2005.pdf

goudah2424 · #6 07-06-2007, 09:05 AM

Yep - That's why you should always check with your state officals before you close the account. You want to make sure you have all your bases covered!

Polly - The way I read that law it only applies to checks - Is that right or would it also apply to returned ach transactions?

polly · #7 07-06-2007, 09:16 AM

Yeah our legislature kinda bent us over here:
[img]/forums/attachments//bsm2_622.jpg[/img]

ramj70 · #8 07-06-2007, 09:20 AM

It is my understanding that usually that only deals with actual paper checks. Most states have a requirement where the payee must get the actual check back from the bank with a stamp stating why the check was not honored and the payee must submit mail a letter to the individual stating the check number and why it was denied. ACH does not generally fall under that because there is no actual check and a voided check can't be used. My bank manager also told me the same thing, that ACH's are handled differently. At least here in Maryland.

Through my job I have talked to district attorney's offices in many jurisdictions about bad check charges for people we are investigating and I usually bring up the ACH thing just to satisfy my own curiosity and they have all stated that an ACH is different from the check laws in regards to prosecution.

Of course this isn't a hard and fast rule for every state and jurisdiction. As has been said before, research and ask questions first. Talk to your bank manager.

Teleport · #9 07-06-2007, 01:46 PM

Your bank should tell you that there will be a couple days known as their "cooling off period" to make sure there are no out-standing checks, or drafts ready to be done off of your account.

Perhaps it's better to just change your account number, and inform the not to allow anything to go through.

goudah2424 · #10 07-06-2007, 02:04 PM

Yeah, this is different then the cooling off period. The account is shown as closed. But if any ach transactions try to go through within like 30 days, they will force open the account and allow the transactions to go through. Your bank account could be closed for two weeks, then bam! You go way negative because of the pdl's ach transaction. It really sucks.

Most banks won't let you close an account if you still have pending transactions.

pokogeo · #11 07-08-2007, 10:32 PM

Another reason it helps to hold debits on an account, I've received a debit for ~$90 from USA Credit, thinking oh I must have gotten another payday loan (I was at the point where I had lost track...) but then realized it was a bit off. I have read about others who that has happened too. Clicking OKAY on payday loan sites sometimes authorizes other things to come through! Getting rid of accounts will solve that. As soon as mine is gone and I've gotten another one, I'm never putting that information online ever again! My Dad was right to be suspicous....

shughes0993 · #12 07-09-2007, 05:57 AM

I bank with peoples cash solutions (peoples bank), and i had a situtation where i had to close my bank account due to payday loans, and i explained to the rep about the situation. She told me not to worry and she closed my old account and when the payday loans hit my old account it opened my old account back up, the bank acutally reversed the debits and sent them back to the lenders as closed account. So if you talk to your bank they will help you. Peoples bank are a really good bank.

smoore1266 · #13 07-17-2007, 02:23 PM

I'm in this pdl cycle of h@# and I had an account with fifththird bank I closed it while it was positive and the bank gave me the credit back. Well a week or so later I get a later in the mail about returned items because those ach's reopened my account and I now owe them almost $3000 because that is how long it took fifth third to close my account and the payday loan companies kept putting the money through.

Sassnlucy · #14 07-17-2007, 02:30 PM

ugh I am sorry this happened to you. Fifth Third is not the friendliest bank to work with, either.......

This is why it is really important to check with your bank on their policy of letting ACH's reopen closed accounts. Too many people have gotten in trouble that way.

finsfan13 · #15 07-20-2007, 05:50 PM

Goudah!!! Great post! Unfortunately too many people close their account too quickly..It can lead to a lot of trouble.

pokogeo · #16 07-23-2007, 08:36 AM

I checked mine over again and again. I was glad to make sure and check that they don't let ACH withdrawls go through closed accounts. I was glad to know that you could only set your account to withdrawl, which I had to do to wait until I was positive so I could close my account. Couldn't have made it without this forum!