This is a question that I am asked quite often and the simple answer is yes! Unfortunately, many people get involved with pay day lenders just trying to make ends meet. They then get into a vicious cycle of paying exorbitant interest on a post-dated check every week out of fear that the pay day lender will present the check to their bank and that it will bounce i.e. be returned as non-sufficient funds.
Once a client has decided that bankruptcy is a viable option, our advice to our client regarding payday lenders who are holding previously written checks is to go immediately to their bank and stop payment on those checks or, if our client has authorized an automatic debit, to stop payment on that as well. We further advise our clients that, out of an abundance of caution, it is best to go ahead and close that bank account to avoid any electronic transactions that the pay day lender may attempt but only after implementing the stop payments on checks or automatic transactions.
This method has proven to be the safest way to avoid a non-sufficient funds check or presentation of a check on a closed account as these are matters that can be turned over to the district attorney for criminal prosecution and collection.
Therefore, it is imperative that you stop payment on the check and or automatic debit AND close the account they are associated with exactly in that order.
What if a client has already had a check from a payday lender returned for non-sufficient funds? In the majority of cases, and from our experience here in Alabama, most payday lenders and cash advance lenders are very cooperative with the bankruptcy process and rarely will turn over non-sufficient funds instrument to the district attorney for prosecution and, further, here in Alabama the district attorneys have not made it a practice to collect for the payday lenders.
If you are caught up in this payday loan cycle and feel that you may need bankruptcy assistance to help you, please contact one of our offices nearest to you and set up a free consultation to speak with one of our licensed attorneys who can further advise you about this matter and any other financial problems that you are experiencing.