HELP PLEASE! Pay Day Loans generating NSF Fees!

[HopefulMamma]

Hello to All,

I am awaiting a call from my attorney (we decided against 'pro se' filing) but could really use some help!

I have several pay day loans that - because I hadn't intended on filing bk - I made an 'extended payment arrangement' on, where I would pay it off in 3-4 'installments'. This is allowed once per year in California.

Well some of my first payments are hitting my account which I 'froze' last week. I was told by my credit union that not only would the debit not be paid, but that the freeze would also not allow any fees to be generated. WRONG.

I have several loans out and tho' we'll be filing, it won't be until the end of the month (29th) and I don't know how many times the payday loan companies will 're submit' for the payment and how many fees will be generated.

I am trying the other tactic of having my debit cards cancelled & possibly having our account number 'shifted' over to another account number - but I was told this can't guarantee that the debits won't hit my account (at least for the NSF fee).

Is there anything I can do right now that will help?

Are the NSF fees/negative balance at my credit union dischargeable?

Please help, I'm starting to freak out. Here we are trying to get help and get out of this whole mess, I don't want to end up with $1000's to pay in NSF when all is said and done!

Thanks in advance !

C/HopefulMamma

[LadyInTheRed]

The fees are dischargeable unless the credit union successfully objects to discharge. They aren't likely to go to the trouble. If I were you, I would get all money out of that credit union and open an account elsewhere. They may have a right to offset against your deposits in other accounts to pay the fees. I would also go talk to the person who told you that freezing the account would avoid any fees and see if you can get the fees reversed. If you don't know the name of that person, find out in case you need it later.

Make sure your attorney lists the credit union as a creditor.

[Drazil65]

Agree with Lady, close the account and move everything, probably a good idea anyway with the impending chapter 7. Br sure to list credit union as creditor for the nsf fees.

[HopefulMamma]

Many thanks, Lady & Drazil.. Thank you so much for the quick replies.. They really helped keep me from totally freaking out until my attorney called.. Which he did & confirmed that yes, I can discharge the fees.. Whew!

And it looks like we're on the right track as we were tying to think ahead & opened a new savings & checking account at a (different) local credit union that we like.

I can't wait until this is all over (join the club, right?) ...As much as it's stressful, at least we can look forward soon to being able to wake up without feeling panic & breaking out into a cold sweat...

Should have done this over 6 years ago ~ sigh..

Many thanks again.... I'm so fortunate to have found this forum.

Blessings to all........

C

[bcohen]

The fees are dischargeable unless the credit union successfully objects to discharge. They aren't likely to go to the trouble.

On what basis could the credit union possibly object to having their "debt" discharged? The alleged NSF fees were for transactions not initiated by the accountholder but instead were automated debits which the accountholder explicitly told the credit union not to honor. I fail to see any legal theory which would allow the credit union to prove fraud or bad faith in order to mount an objection. Additionally, no creditor is going to spend thousands of dollars to file an AP over a debt of less than a few thousand dollars!

In any case, the best course of action is to simply quit using this credit union, quit depositing money into this account, and allowing the chips to fall as they may with regard to overdraft fees. Open a new account at a completely different bank or credit union, and ignore this old one. When you file for bankruptcy, list the old credit union as a creditor, and the alleged "debt" will be discharged. Do not fear the threats which you will likely receive that if you don't pay the overdraft fees, they will report you to ChexSystems, preventing you from opening a new account at another bank. Once you receive the bankruptcy discharge, simply request a free copy of your ChexSystems report, fill out a dispute form, dispute the negative entries as discharged in bankruptcy, enclose a copy of your discharge paper, and ChexSystems will delete all negative entries.

[LadyInTheRed]

bcohen, I am not a lawyer and will not say that a debt will absolutely be discharged when there is always a possibility a creditor could object to discharge. In this case, they may claim that it was fraud that lead to the charges. They could claim that she took a payday loan with an intent to make sure there were no funds in her account to cover the payment knowing that would cause the NSF feees. Whether they would win such a claim, I don't know. I would hope not. As for the cost of an AP, note my comment that the credit union is unlikely to do that. But, frivilous lawsuits for small amounts do happen. That's why I avoid saying without qualification that the fees will be discharged. I left that to the attorney HopefullMamma said she had already called about the issue.

[bcohen]

In this case, they may claim that it was fraud that lead to the charges. They could claim that she took a payday loan with an intent to make sure there were no funds in her account to cover the payment knowing that would cause the NSF feees.

Even assuming that such intent existed (i.e. a person took out payday loans knowing that they would not fully repay them), I fail to see how the bank--or credit union in this case is an injured party. Just because the bank/credit union charges $X for NSF fees doesn't mean that they suffer a pecuniary loss in that amount each time their computer rejects an automated debit! The payday lender, on the other hand, would be an injured party in the above example, and if they could prove intent, they would have a case. (Of course, no payday lender is going to bother filing an AP, because the loan amounts are too small to justify the legal expenses.)

[LadyInTheRed]

I don't care what the debt is, how unlikely it is that a creditor will file an AP or how likely a creditor will win an AP. I am not going to tell any stranger on the internet that any particular debt will definitely be discharged even if I think it most likely will be.