Bizarre: Can't Stop 2nd Mortge(Heloc) From Being Paid By Overdraft Checking Account!!

[ryan]

At least to me this is bizarre:

Besides being months behind on big CC's I have this situation.

Have a First with BofA just now in Foreclosure...meanwhile 2nd, a HELOC also with BofA is current. Why, because when I originally got the Heloc, Bofa required setting up a BofA check acct. and having auto overdraft to pay the BofA second.
I agreed and it worked fine for almost 2 years til my recent financial hardship.

Now, for last 2 months, there is NO MONEY in the BofA checking acct.

I just assumed the overddraft feature would stop , but it continues...

Every month now, BofA Heloc hits my checking acct for the payment, finds no balance there, and then OVERDRAFTS THE ACCT TO PAY THEMSELVES!

So, the Heloc 2nd remains current while the first is already in FC....

...and I pile up larger and larger overdraft fees in check acct and now owe hundreds to my Bofa check acct. I cannot stop this.
BofA local branch banker says she can waive the $35 fees each time, but the
terms of the original Heloc require that the checking acct remain open!

I cannot close the checking acct! ...any suggestions what to do????

[sofarsogood2]

I would check my loan docs to see if it specifically prohibits closing your account. I'm thinking maybe the docs say that if you close the account then you default automatically on the loan. If so, no big deal because you are defaulting anyway.

I wouldn't think a bank could legally prohibit closing an account- they could impose consequences perhaps, but forcing you to keep an account open with no money in it seems odd. JMO

Maybe someone with some experience in this will chime in.

[lrprn]

I just assumed the overddraft feature would stop , but it continues...

Here lies your problem. You needed to close the account when the balance was positive and low, plus withdraw your permission in writing (notarized and certified mail) for BoA to hit your account for payment. Now that it's overdrawn, as you've discovered, you can't close an account that's negative. Tough lesson to learn this way

You're in the Before Discharge forum - have you already filed and your case is current? If you have, then BoA is violating your automatic stay. Get your lawyer on this immediately. If you don't have a lawyer, then you'll have to get yourself on this immediately or find a lawyer to help you fight back.

[ryan]

To the moderator: My apologies,... I may be in the wrong forum, as I didn't know exactly where to place this post. I haven't filed at all yet, and haven;t planned to until this summer, hopefully, unless sued much sooner. ...also need to put some time between last CC charges.

I appreciate the advice from you guys, and see your points.
First I'll dig out loan papers and try to see what stipulations are about keeping acct open...

What if I pay the back 3 payments to bring the check account current and THEN send them certified/notarized notice to close acct?
I'm thinking that would be worth a try. ....I agree, I HAVE to do something.

[DeadManCrawling]

No point in paying if you are sure you will file, whether that is this summer or 3 years from now.

Since you are not paying the 1st, they know the score.

Just ignore them, don't pay anything, and make certain this is included in your BK filing.

[ryan]

well, speak of the devil....I just received a little notice today from BofA checking acct.

says, ...."your acct is overdrawn since..... with an unpaid balance of.... if you do not make a deposit immediately, we may transfer funds from other accts you have with BofA (have none) ...or be forced to close your acct....."

..."should we close your acct, we may send a report to Chexsystems, Inc.....reports submitted to chexssytems may result in your being unable to establish an acct with any financial institution for up to 5 years, even tho you repay the debt.....

we may also refer your acct to a collection agency...."

so, I guess they are not going to borrow from themselves to pay themselves anymore.

I wasn't aware of chexsystems, either.

[BobMango]

well, speak of the devil....I just received a little notice today from BofA checking acct.

says, ...."your acct is overdrawn since..... with an unpaid balance of.... if you do not make a deposit immediately, we may transfer funds from other accts you have with BofA (have none) ...or be forced to close your acct....."

..."should we close your acct, we may send a report to Chexsystems, Inc.....reports submitted to chexssytems may result in your being unable to establish an acct with any financial institution for up to 5 years, even tho you repay the debt.....

we may also refer your acct to a collection agency...."

so, I guess they are not going to borrow from themselves to pay themselves anymore.

I wasn't aware of chexsystems, either.

You may want to quickly open a new account somewhere else if you don't already have one. Having a black mark from chexksystems will make it difficult to open a new account.

[ryan]

Good idea, to open another account at a new bank. I will do that tomorrow, pronto.
Thanks!

[helpmeout]

Here lies your problem. You needed to close the account when the balance was positive and low, plus withdraw your permission in writing (notarized and certified mail) for BoA to hit your account for payment. Now that it's overdrawn, as you've discovered, you can't close an account that's negative. Tough lesson to learn this way

You're in the Before Discharge forum - have you already filed and your case is current? If you have, then BoA is violating your automatic stay. Get your lawyer on this immediately. If you don't have a lawyer, then you'll have to get yourself on this immediately or find a lawyer to help you fight back.

When my ex and I split, he started messing around with the amount that he was supposed to pay. I wanted to close our joint account. It was positive. The bank (who holds the mortgage and at the time, second mortgage) refused to do so until I provided them with a new account from which to take the money.