Bank trying to screw me Who is right

[car67]

I have a business that failed. I knew it was coming so I went to the bank around 11 am and closed my personal checking, my business checking, and savings. I took out my money and told the teller I wanted the accounts at zero and hard closed for no deposits or withdrawals and give her my debit card. I got my money and assured everything was zero and the accounts were closed the moment I left the bank.

Well the next day merchant services sent a small $200 deposit and the bank reopened the account as a courtesy unknown to me. Fast forward 18 days I get a call from the bank telling me the account is now negative as merchant services had a bunch of chargebacks and bill payments still came in and the bank paid as a courtesy cause I have never been negative. This is the same bank which a year earlier had denied me a small business line of credit due to BK on personal credit. Now why would a bank reopen a account thats closed and pay items presented when the account was to be closed and they had previously denied me a credit line due to risk??????

This is just plain crazy. Thank god its a business account and the business is closed and they can sue of they want to send collections nothing to collect from the business as its dead on their is nothing of value left. WHAT to do? Who is right who is wrong in this picture. I screamed at the bank how is this possible?

[Pandora]

I can answer the question as to "how" it happened - it's more than likely due to you having an automatic deposit or ACH that was already in motion. We found this out many years ago when we closed our joint checking account to switch to another lender, and while we closed the account weeks prior - SSD did not get their system updated in a timely fashion, therefore the deposit automatically re-activated our account. Called the bank and asked why that occurred and was told even if the account is closed, any auto deposits will automatically re-open the account so as not to have the money sent back.

[car67]

Understand thats what they said the ironic thing they accepted one deposit but refused another days apart but continue to pay withdraws by merchant services.
To me when you go to a bank and walk in and take all your money and tell the bank your done they should refuse all deposits and withdrawals as the banking relationship is terminated when a customer closes the accounts and takes the money and leaves the account at zero. To assume we have a relationship past that point is not anything I agreed to. I am wondering what recourse I have. I already told the bank to walk the plank we had no relationship to do monetary deals past day of closure. Its not my fault they didnt update the system to closed.

[justbroke]

That's correct, but a "merchant account" is special. It is in fact subject to chargebacks for months -- please don't ask how many months, but it's at least 3 months. The business account should have been put into restricted ("no withdrawals") status but kept open for several months.

As you learned, closing a business account that is attached to a merchant (credit card) account, can take weeks to actually shut down since chargebacks can be an issue. Additionally, if you "knew" or should have known that there may be chargebacks coming in, then you should take more care. Turning off "ACH" and other automatic payments requires that you go to the vendor that you gave permission to debit an account. Otherwise, it can be futile to simply close a business account, when merchant-related issues occur and the account is re-opened by the bank to insure that they have a true and final settled account.

Sorry for your woes.

[car67]

Justbroke.... Understood however the merchant account for the business was not with the bank in question. If that matters. The bank was just a depository for all incoming revenue. I didnt open the merchant account there. But none the less the business is dead and there is nothing left to pay the negative so I would assume worse case scenario they would send the corp to collections and its just a broke corp with no assetts so nothing left to grab so really in the big picture of things the bank will just have to write off the debt or try to collect from a corp that is non performing with no open bank accounts anywhere.

[justbroke]

Justbroke.... Understood however the merchant account for the business was not with the bank in question. If that matters. The bank was just a depository for all incoming revenue. I didnt open the merchant account there. But none the less the business is dead and there is nothing left to pay the negative so I would assume worse case scenario they would send the corp to collections and its just a broke corp with no assetts so nothing left to grab so really in the big picture of things the bank will just have to write off the debt or try to collect from a corp that is non performing with no open bank accounts anywhere.

Well, unless it's an S-Corp or LLC and you are the sole shareholder. If it's small potatoes, then they'll just write it off.

I actually had a collection agency call me threatening suit for an electric account that I had on one of my Rental Properties that I included in bankruptcy. Apparently, my tenant never changed it over and was paying the bill until they left. Then it was billing but going to the rental so I never received a bill. Fast forward to 1 year post-discharge and I get a call and they were quite irrate about me "not" filing for the business. I said that it was not under my S-Corp but under a d/b/a sole-proprietorship and that name IS on the petition. It was for $200 and they were really rude and I just instructed them to check with their attorney before speaking to me again. They have never bothered me again (some 4 months now).

As for your merchant account... I was mentioning, that the bank account was where the proceeds of the sales transactions were placed. That is also the account that merchant services debits for chargebacks.

[car67]

Yup was S Corp and I was the only shareholder. They would have to pierce the corp veil to make me liable but my my business attorney said thats tough to do as there is no law against failed business and it happens all the time the corps close and the debt is a wash if no assetts are left.
Damn the bank!