How to stop a payday loan
How To Stop Automatic Electronic Payment On Pay Day Loan Debt?
When it comes to dealing with the issues pertaining to the electronic payment of pay day loan debt, there are certain legal rights that have been provided to consumers, not only as per federal laws but also as per industry banking and lending rules. If a payday lender is taking money electronically out of your bank account, you have the right to stop such payments. If you have insufficient fund in your bank account and if the lenders are sending frequent request for electronic debit, it will result in a drain of bounced check fees and other repeated finance charges. Stopping the payment by using these rights though does not make you free from the debt liability but it at least makes sure that your debts do not grow fast while you are making arrangements for the payments.
There Is No Obligation On The Debtor To Pay Electronically
The first thing that is very important for you to keep in mind that electronic payment of pay day loan debt cannot be forced on you. As per Electronic Fund Transfer Act, if you are borrowing these types of short-term cash advances with built-in loan renewals, you do not have any obligations to pay electronically. The same Act gives you the legal right to revoke authorization for all future electronic withdrawal by a lender. You also have an option to stop payment on a specific withdrawal only. However, it is important to note that in either case, you are likely to be charged a certain amount of stop payment fee by your bank.
How To Stop A Specific Withdrawal?
If you want to stop a specific withdrawal on that renews itself automatically every month if the dues are not paid in full, you just have to notify your bank about it either orally or in writing. But, this notification must be sent to your bank at least three business days in advance. For example, if the payment is scheduled on Monday, 23rd August 2010, you must send the notification for stop payment order before 18th August (because 21 and 22 are weekends, not business days). If you notify the bank orally, you may be asked to send a written confirmation within the next 14 days. If the bank does not receive the written notification within this time frame, the
stop payment order will automatically expire after 14 days.
Revoking Authorization For All Future Withdrawals
Though you have the right to request bank to revoke authorization for all future withdrawals by a lender, you must first contact your lender and notify them that you are going to stop payments. While you request your bank for the stop payment order for a specific pay day loan debt, you must provide a copy of the letter that you have notified your lender about it. Again, you must place the stop payment order at least three business days before the payment is scheduled. You will be asked to send the copy of the letter to the bank within the next 14 days in order to confirm that your lender has also been notified about it. If you fail to send this letter, the subsequent debits to your account will continue to be honored.
As per industry rules, there can be several grounds on which the authorization of future electronic withdrawal by a lender may be revoked. It is mandatory for the lenders to disclose clearly in the loan agreement about all those circumstances when the debtor may revoke authorization. So, look into the fine prints thoroughly and see if your lender has followed this rule. If no such disclosure has been made in the contract, you have a case and you can sue your lender for this. On the other hand, if the disclosure has been made, you can simply follow those instructions to stop further payments.
Some Possible Issues
It is true that you have certain rights to stop electronic payments for pay day loan debt that automatically renews itself, but things can sometimes be a little complicated when it comes to exercising those rights successfully. The process may vary from one bank to another. For example, the process of stop payment in some banks is only limited to identify a specific dollar amount or specific check numbers. It means if there are other authorized debits scheduled on other loans but for the same amount, even that payment may mistakenly be blocked.
Therefore, if you want to block a specific from taking money out of your bank account electronically for pay day loan debt, you will have to contact your bank and find out if they allow you to block the name of a payee.Source: www.debtconsolidationpaydayloan.com
Category: Payday loans