Overdrawn Checking Accounts (post-filing)

[pathingapath]

I filed for bankruptcy on 24 September and am due for discharge any day now. Since filing, 2 of my USAA checking accounts became overdrawn (and subsequently closed) and have recently been assigned to a CA. From what I gather even though the debt was sent to a CA, USAA still owns it because I was able to call them directly to make payment arragements.



1) How does USAA report overdrawn checking accounts? Are they just reported to Telecheck and/or Chexsytems? Or are they also reported to the top 3?



2) If this does appear on my credit reports, how will this look along side the bankruptcy filing? Since this happened pre-discharge, does it carry as much weight than if it had happened post-discharge? I have read that late's "after bankruptcy" are detrimental....I'm just not sure what is considered "after" bankruptcy (is it post-filing or post-discharge)?



Thanks in advance for your help.

[Drazil65]

Hi, typically the banks only report to the chexsystems data base but may eventually report in other places if it continues.

" I have read that late's "after bankruptcy" are detrimental....I'm just not sure what is considered "after" bankruptcy (is it post-filing or post-discharge)?"

As you just filed bankruptcy you are about as "detrimental" as you can get to your financial picture so I would not be worried about how it is reporting right this second. What I probably would be worried about is the fact that you do not even have your discharge in hand and you are bouncing checks already? Did filing help you out at all and maybe you just forgot to fund your account? I hope the latter is the reason and if it is then you will keep funds in your account from this point forward and not have to worry about whether or not they report it. Good Luck!



"

[bcohen]

As you just filed bankruptcy you are about as "detrimental" as you can get to your financial picture so I would not be worried about how it is reporting right this second. What I probably would be worried about is the fact that you do not even have your discharge in hand and you are bouncing checks already?

Who said anything about bouncing checks? For all we know, a payday lender or judgment creditor (illegally) took money out of the OP's bank account, in spite of the automatic stay. Or possibly, the bank charged a bunch of fees for some reason. In order to give proper advice, we would really need to know what caused the overdrafts, and when (in relation to the BK filing) they happened.

[pathingapath]

Hi, typically the banks only report to the chexsystems data base but may eventually report in other places if it continues.

That's what I was thinking. Thank you.

As you just filed bankruptcy you are about as "detrimental" as you can get to your financial picture so I would not be worried about how it is reporting right this second. What I probably would be worried about is the fact that you do not even have your discharge in hand and you are bouncing checks already? Did filing help you out at all and maybe you just forgot to fund your account? I hope the latter is the reason and if it is then you will keep funds in your account from this point forward and not have to worry about whether or not they report it. Good Luck!

Odd that I'm in a forum where I'm sure the dirty deeds of creditors are frequently discussed but you automatically came to that deduction as to why my accounts are overdrawn.

Who said anything about bouncing checks? For all we know, a payday lender or judgment creditor (illegally) took money out of the OP's bank account, in spite of the automatic stay. Or possibly, the bank charged a bunch of fees for some reason. In order to give proper advice, we would really need to know what caused the overdrafts, and when (in relation to the BK filing) they happened.

Thank you. The accounts became overdrawn about a week after I filed due to a couple of creditors trying to run ACH for payment.

[Drazil65]

Sorry, I was absolutely thinking that since op filed the creditors could not try to collect any longer and the only one who had access was op (many of us closed old accts and opened new checking elsewhere before filing to avoid such activity). My mistake for sure and I apologize for the assumption it was op's error (maybe op should go after the people that violated the stay in lieu of making payments back to bank as the accts are closed anyway and op probably has new accts by now) and yes probably a few more details would have helped.

Actually it makes me happy that it was not op's fault and I still wish op good luck.

[bcohen]

The moment you filed for Chapter 7 bankruptcy, the automatic stay began, which prevents creditors from commencing or continuing any effort to collect on your pre-petition debts. Auto-debiting your checking account is a violation of the automatic stay, even if the creditors had not yet received notice of the BK filing.

What you need to do is first write dispute letters to the creditors who debited your account reminding them that you filed for Chapter 7 bankruptcy on (date) and when you filed, an automatic stay took effect, of which their taking money from your account is a clear violation. Inform the creditors that if they do not return the funds by (date) you will exercise your legal rights and have them sanctioned by the bankruptcy court. Most likely, the receipt of such a letter (sent Certified Mail, of course) will result in the creditors reversing any withdrawals from your bank account.

Next, you need to write to USAA and inform them about your bankruptcy filing, and the fact that these withdrawal attempts were not initiated by you, that the creditors illegally debited your account in violation of the automatic stay, and that USAA is not entitled to--and cannot attempt to charge you--for any bank fees resulting from these illegal withdrawal attempts. You should demand that USAA remove any and all bank fees from the account, waive any collection charges, and cease and desist from any further attempt to collect this money. Do not let them bully you into paying money which they are not legally entitled to collect!

Finally, you need to send a cease-and-desist letter to the collection agency. There is no reason for you to deal with them at all in this matter.

[May2014]

The big question is what "creditors" were running the ACH. A credit card is one thing, but an ACH from a normal bill (electric, insurance, etc) would not violate the stay. In that instance, it would be the customer's responsibility to put a stop pay on the account, a bank would not know whether or not someone filed bankruptcy unless they were a named creditor. In the case of a named creditor, typically the company that violated stay would need to refund overdraft charges and return anything withdrawn. I work for a bank, and policy is to only return bank-related errors. Banks shouldn't be penalized for another company's mistake.

[LadyInTheRed]

May2014 is right. USAA has done nothing wrong. The overdraft occured after the filing of the BK and is a post-petion debt. The automatic stay does not prevent the collection of a post-petition debt as long as the creditor doesn't try to collect against assets of the bankruptcy estate. It is the creditors who initiated the ACH payments that are in violation of the automatic stay and should return the payments.

Pathingthepath, you or your attorney should contact the creditors and insist they return the money. They should also probably pay your overdraft fees.