In today’s electronic world, many of us pay our bills online and even schedule regular or monthly online payments. This is the modern day equivalent of people providing creditors such as payday loan stores or others with postdated checks. When an individual files for bankruptcy, those creditors are generally not supposed to receive any further payments. As a practicing bankruptcy attorney, the problem I am seeing frequently is that these creditors continue to accept and process these payments, even after the filing of a bankruptcy, in violation of bankruptcy law. Clients who expected to have money in their accounts are faced with a rude awakening when the money they expected to have is not there. You can imagine all this problems this can cause.
When a bankruptcy is filed, either a Chapter 7 or Chapter 13, all unsecured creditors holding postdated checks or automatic withdrawal authorizations, are no longer entitled to receive those payments. When they receive the bankruptcy notice in the mail, they should cease collecting any of these funds. While this has always been an issue with certain creditors, with the advent of online payday loan stores, it is becoming especially common for those entities to disregard the bankruptcy and continue to access funds. Filing motions to force these entitles to reimburse the funds is very difficult as many of them operate under fictitious names or even off-shore.
The bottom line advice I want to give all considering bankruptcy is to make sure before you file bankruptcy to stop payment on any postdated checks and terminate any online payments that may take place after the filing of the bankruptcy. The fact is that these creditors often times do not take that action themselves and given the amount of money involved, it is often times not worth pursuing them.B While actions can be taken in court to seek return of wrongfully obtained payments along with attorney fees and punitive damages, the best advice is to avoid the problem in the first place and simply stop payment on all such checks and withdraw all electronic payment authorizations before you file for bankruptcy protection. – Neil Sader
We have more than 30 years of combined experience with Chapter 7 and Chapter 13 Bankruptcy cases in Kansas and Missouri. Call us today for a free phone consultation at 816-281-6349.