I met with “Ed” (not his real name) a few weeks ago. Ed was pretty upset with his bank – here’s why:
- Ed had a Visa with Bank A
- Ed also had a bank account with Bank A
- Ed fell behind in his Visa payment to Bank A
- Bank A seized the payment out of Ed’s bank account without Ed’s permission; in fact, Ed was upset that Bank A didn’t even give him notice
Ed thought the bank’s actions were illegal, and wanted me to help him get his money back. No could do – know why? Bank A had the legal right (yes, a legal right) to go into his bank account to take the missed payment. Ed wanted to know what he could do to make sure it didn’t happen again. Ed lost his job at a local factory, was working 2 low paying part-time jobs, and was struggling to make his Visa payments – he was doing the best he could, but knew he was going to continue to struggle to pay his Visa and other credit cards. After careful consideration of all of the options that Ed and I discussed, Ed decided to file personal bankruptcy. He was worried that the bank was going to seize money out of his account again, and asked for my advice. Here is what I told him:
- Open a new bank account at a bank that you owe no money to; here is what I mean: if you owe Bank B money, don’t open an account at Bank B. If you don’t owe Bank C any money, Bank C would be a good choice
- Make a list of all of your required monthly payments that come automatically out of your old account. Ed’s list included his car insurance and rent
- Contact the insurance company and landlord and give them your new banking information and arrange for your next payments to be withdrawn from the new account instead of the old one
- Make a list of all of your required monthly deposits that are deposited automatically into your old account. Ed’s list included his pay from two part-time jobs.
- Contact both employers and give them your new banking information and arrange for your next pays to be deposited into your new bank account
- When your first required deposits and withdrawals have gone into and out of your new account, close the old account. NOTE: Ed’s account was in overdraft, so he was not able to close the account – we simply included the overdraft amount as a debt in his bankruptcy.
For Ed, it was as simple as that; he changed his accounts and the bank did not seize any more funds. Ed realized after talking with me that the bank taking action against his bank account was a sign that he had to do something about his debt. He struggled with the decision to file bankruptcy – he said it wasn’t easy for him, but he knew that he simply had to do something – continuing to struggle and worry and then have the added stress of losing money he did not expect to lose was no longer an option for him.
If you are struggling to manage the money related worries associated with job loss, reduced work hours, separation, illness or any other negative life event, do what you can to protect the money you do have in your account. Changing banks allows you the assurance of being in control of your money; and, allows you some time to sort out solutions. Hopefully, things will improve, and you will find yourself back on track, but if you don’t, there may be options that you can consider. I know it isn’t always easy to reach out for some help, but you might find, just like Ed, that help is closer than you think.
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