Auto-withdrawals and the Automatic Stay question...help?

[bkmaggster]

I have a question, I will try not to make it too complicated. I really appreciate anyone's help.

I already surrendered my car.

DH planned to do a ride-through on his car, as he owes about what it's worth. Eventually we were going to save up some money, buy a car in cash, and surrender it.

Before we filed, DH was 1 month behind on payments. He had set up a payment plan with Capital One where he was going to make payment + 1/3 so that he would be caught up in 3 months. This plan was set up for automatic withdrawal on the 16th of each month. The auto-withdraws have continued throughout the bankruptcy.

In the meantime, Capital One farmed out our account to Ascension Capital, some bottom-feeder 3rd party that services BK accounts. They sent us a reaffirmation agreement that was for the full amount of the original purchase and a higher interest rate. We laughed.

Ascension Capital called DH last week and told him he owed 2+ months payment immediately. DH explained that CapOne has been taking out the payment as agreed. Ascension said that CapOne cannot do that. Then Ascension said they are going to lift the stay. DH told them to go ahead, as he would not be paying any money to Ascension or signing a reaffirm with them.

Today, Capital One did an unexpected auto-withdraw and overdrafted our account.

Has anyone had any experience with Ascension?

We don't care about keeping the car. How do we get our money back (we are ProSe)?

Have they violated the stay by doing auto-withdraws? If so, what do we do?

[backtoschool]

[bkmaggster]

Hmmm. Interesting. So the interpretation here would be that the 3 ACHs were authorized before the filing, so it could continued to be pulled?

But today's withdrawal was never part of the original agreement and was never authorized. That can't possibly be ok, or else every creditor would be pulling out of all our accounts freely.

[backtoschool]

From reading some more on it, that seems to be the case. If the creditors had a prior agreement with you to pull the money out, and if you didn't file in your petition that you wanted to turn the car in, then the ach withdrawal's are not a violation of the automatic stay. In each case I read about, the lawyers were advising their clients to move bank accounts before filing to avoid just such actions as what happened to you.

Of course, this is just info I pulled from the web so ymmv. I have no idea if there are examples of creditors not being able to do this, but I couldn't find any.

[bkmaggster]

But you understand the part about the money being pulled today that was NOT part of any agreement, yes? How could that not be a violation?

[backtoschool]

But you understand the part about the money being pulled today that was NOT part of any agreement, yes? How could that not be a violation?

If they have your bank account info, and you authorized them to take out monthly payments, there is probably some fine print in there saying they can dip into your account.

A lot of the case history I was reading related to payday loans that cashed postdated checks, or did ach transactions, or credit unions that emptied an account for more than the monthly payment, even after the person filed bankruptcy. Both types of situations were not seen to be violations of the automatic stay. There were also cases where the bank put an administrative hold on the account for the amount owed on a debt, and a lot of other payments were not paid and bounced etc, but the court kept flipping back and forth as to whether that was a violation of the automatic stay.

My guess is that there is some fine print in your contract that says that they can keep dipping into your account to fulfill the terms of the loan.

Of course I am not a lawyer, I am just a geeky insolvent woman who did some research on the web, so ymmv.

[bkmaggster]

All I can find on the subject of this exception is in reference to Payday loans, where a physical check has been written.

The only reference to ACH I can find is attorney's advising stop payments to be made for both the checks and ACH's from the payday loan company in case they try to end-run around your stop payment.

I have read over and over again on this forum how people's auto-withdrawals were canceled by their mortgage and car companies. If this exception applies to verbal auto-withdrawal agreements, wouldn't all secured creditors continue to take this form of payment?

Also, we received a letter in the mail from CapOne shortly after filing saying they would not be able to complete any further withdrawals from our account and an address to send checks to. We never sent any checks because they kept pulling payments out of the accounts.

I'm not trying to be difficult and I do appreciate your research, I'm just trying to understand why it is so different than anything else I have heard on the subject here.

Edit: we were typing at the same time! Would you please share with me the link where you found information specific to ACH and a secured loan? Thank you!

[bkmaggster]

Ok, hold the phone.

I just talked to DH.

We filed 6/16/09

Cap One called to make payment arrangements 7/6/09. Arrangement was made for withdrawal on 7/16, 8/16, and 9/16 to bring account current by discharge on or near 9/21.

Cap One sent letter dated 7/7/09 stating that because of our bankruptcy, the payment arrangement could not be honored and to send checks to X address.

They have pulled money out of our account 7/16 and 8/16 and 8/31 (never part of agreement).

I don't think this falls under any exception of the stay.

Now what?

[backtoschool]

Ok, hold the phone.

I just talked to DH.

We filed 6/16/09

Cap One called to make payment arrangements 7/6/09. Arrangement was made for withdrawal on 7/16, 8/16, and 9/16 to bring account current by discharge on or near 9/21.

Cap One sent letter dated 7/7/09 stating that because of our bankruptcy, the payment arrangement could not be honored and to send checks to X address.

They have pulled money out of our account 7/16 and 8/16 and 8/31 (never part of agreement).

I don't think this falls under any exception of the stay.

Now what?

Here is a link to a pdf that talks about credit unions and reaffirmation agreements and how the bank has a right to renege on them even if they agreed to the agreement.

http://www.weltman.com/content/682005102047.PDF

I think some of this article would apply to what capital one is doing, but it does not apply to the ach part, it just applies to them negating the agreement they made with you.

Here is a link to a legal site talking about payday loans but about 2/3 of the way down the page they go into detail on how random ach withdrawals are not a violation of the automatic stay.

http://www.prodebtor.com/1794/73303.html

Did you sign an affirmation agreement? I am assuming you did.

[bkmaggster]

Here is a link to a pdf that talks about credit unions and reaffirmation agreements and how the bank has a right to renege on them even if they agreed to the agreement.

http://www.weltman.com/content/682005102047.PDF

I think some of this article would apply to what capital one is doing, but it does not apply to the ach part, it just applies to them negating the agreement they made with you.

Here is a link to a legal site talking about payday loans but about 2/3 of the way down the page they go into detail on how random ach withdrawals are not a violation of the automatic stay.

http://www.prodebtor.com/1794/73303.html

Did you sign an affirmation agreement? I am assuming you did.

No no no no! If you look at the original post we LAUGHED at the reaffirmation agreement, we never intended to reaffirm, and we absolutely did not. The terms of the reaffirmation agreement were the original loan amount + a higher interest rate. No!

I think you are confusing a verbal payment plan with a reaffirmation agreement.

Did you see my latest update? The auto-withdraw agreement was made AFTER filing. The exception you are talking about only refers to instruments of payment delivered BEFORE filing.

[backtoschool]

No no no no! If you look at the original post we LAUGHED at the reaffirmation agreement, we never intended to reaffirm, and we absolutely did not. The terms of the reaffirmation agreement were the original loan amount + a higher interest rate. No!

Did you see my latest update? The auto-withdraw agreement was made AFTER filing. The exception you are talking about only refers to instruments of payment delivered BEFORE filing.

Yes I read the posts, but I assumed that you had some sort of agreement with them to withdraw normal monthly payments from that account before you filed as well.

I think it would be worth pursuing a challenge to the withdrawal. CapOne should have filed for a lifting of the stay before they took the money in my opinion. It's fuzzy though, since you made a voluntary agreement with them during your bankruptcy.

Yes I did read that you didn't sign the reaffirmation agreement, in fact one of the links I sent was to give examples to show that CapOne didn't have to honor the pricing and terms of your original loan.

Bottom line: CapOne probably should have gotten a relief from automatic stay before they took the money.

[bkmaggster]

Yes I read the posts, but I assumed that you had some sort of agreement with them to withdraw normal monthly payments from that account before you filed as well.

I think it would be worth pursuing a challenge to the withdrawal. CapOne should have filed for a lifting of the stay before they took the money in my opinion. It's fuzzy though, since you made a voluntary agreement with them during your bankruptcy.

Yes I did read that you didn't sign the reaffirmation agreement, in fact one of the links I sent was to give examples to show that CapOne didn't have to honor the pricing and terms of your original loan.

Bottom line: CapOne probably should have gotten a relief from automatic stay before they took the money.

Also my persistent "no"s were in reaction to the ridiculousness of the reaffirmation agreement, not you.

I know they can do whatever they want on the reaffirmation, but the judge isn't going to sign it, and neither were we.

Thanks for your input. I think we are going to dispute the charges through our CU, they've been really helpful so far.

[bkmaggster]

I just wanted to follow up on this for anyone in the future who has the same situation.

DH went to our credit union in person and showed them the paperwork from the BK and the letter from CapOne saying they would not honor the payment agreement and would not take any funds from our account.

The rep from our CU revoked the ACH charges. All we had to pay was a $20 dollar fee. They also put an automatic stop payment on our account if CapOne tries to take out any further payments.

So just to reiterate, there are no exceptions to the automatic stay for "payment plans" that are made after filing - and it is not ok for your creditors to call and try to get your approval for such plans.

[Chowder]

Thanks for the follow up.

If you don't mind..... You mentioned in a separate thread having to surrender a second car. Is this related to that other post?

[bkmaggster]

Thanks for the follow up.

If you don't mind..... You mentioned in a separate thread having to surrender a second car. Is this related to that other post?

Did I mention it? Yes, we already surrendered our other car so this will be our second surrender. We feel that CapOne's behavior during the BK has just proven that we do not need to maintain an auto-loan on a "ride through" basis. It's cash or metro, no more debt-slavery.

Just curious, why do you ask?

Also Chowder - we are with the "big" CU in our district - you know the one - I've had an account with them for 20+ years and they have been fantastic through this.