How to Stop Bank Drafts on Payday Loans After Filing Chapter 7

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Title: How to Stop Bank Drafts on Payday Loans After Filing Chapter 7


Filing for Chapter 7 bankruptcy provides individuals with a fresh start by eliminating most of their debts, including payday loans. However, some lenders may continue to attempt to collect funds through automatic bank drafts, causing financial strain on those seeking relief. This article aims to guide individuals on how to stop bank drafts on payday loans after filing Chapter 7, providing clarity on the process and answering common questions.

I. Understanding the Bankruptcy Process:

Before delving into stopping bank drafts on payday loans, it is crucial to understand the basics of Chapter 7 bankruptcy. Chapter 7 is a form of bankruptcy that discharges most unsecured debts, relieving individuals of the obligation to repay them. This includes payday loans, credit card debts, medical bills, and more. Once bankruptcy is filed, an automatic stay is imposed, preventing creditors from continuing collection efforts.

II. Identifying Payday Loans Subject to Bank Drafts:

To stop bank drafts on payday loans, it is essential to identify which loans are subject to these automatic payments. Review your bank statements to identify any recurring withdrawals made by payday loan lenders. Make a note of the lender’s name, contact information, and the loan amount.

III. Notify Your Bank:

Contact your bank and inform them that you have filed for Chapter 7 bankruptcy and provide them with the relevant details. Request that they place a stop payment on any recurring withdrawals from payday loan lenders. It is advisable to follow up in writing, sending a certified letter to your bank to ensure proper documentation.

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IV. Provide Proof of Bankruptcy Filing:

To support your request, provide your bank with proof of your bankruptcy filing. This can include a copy of the bankruptcy petition, the automatic stay order issued by the court, or a letter from your bankruptcy attorney confirming your filing. This evidence will strengthen your case and assist your bank in halting any further bank drafts.

V. Monitor Your Bank Account:

Even after notifying your bank, it is essential to closely monitor your bank account for any unauthorized withdrawals. If any payday loan lender continues to make withdrawals, contact your bank immediately, providing them with the necessary details. They should take appropriate action to stop these transactions.


Q1. Can payday loan lenders continue to withdraw funds after Chapter 7 bankruptcy is filed?

A1. Payday loan lenders are legally obligated to cease collection efforts once you file for Chapter 7 bankruptcy. However, some lenders may attempt to continue automatic bank drafts. In such cases, you can inform your bank and provide proof of your bankruptcy filing to stop these withdrawals.

Q2. Can I close my bank account to avoid payday loan lenders’ bank drafts?

A2. Closing your bank account to avoid payday loan lenders’ bank drafts is not recommended. It is crucial to maintain an open account to receive wages, government benefits, or other necessary funds. Instead, notify your bank of your bankruptcy filing and request a stop payment on these transactions.

Q3. What if payday loan lenders ignore my request and continue to withdraw funds?

A3. If payday loan lenders persist in withdrawing funds despite your bankruptcy filing and bank notification, contact your bankruptcy attorney immediately. They can take legal action against the lenders for violating the automatic stay imposed by the bankruptcy court.

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Stopping bank drafts on payday loans after filing Chapter 7 bankruptcy is crucial to ensuring a successful and stress-free financial fresh start. By notifying your bank and providing proof of your bankruptcy filing, you can prevent payday loan lenders from continuing their collections efforts. Remember to monitor your bank account closely and take necessary action if unauthorized withdrawals persist. Seeking guidance from a bankruptcy attorney can provide additional support during this process and help protect your rights.