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How to Stop Automatic Payment Withdrawals

How to Stop Automatic Payment Withdrawals

A friend of mine received a loan from Avant a few months ago. Although the payments fit into his budget, the timing did not. Living paycheck to paycheck is difficult enough without having a company withdraw money on odd dates. Since the company did not give him the option to change the withdrawal date, he decided to revoke authorization for automatic payments altogether.

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The problem?

Avant doesn’t allow you to do that. At least, not officially. Any attempt to remove authorization through the company will be met with opposition – and that makes sense, because it removes the guarantee of payment.

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But it doesn’t matter what Avant or any company does or doesn’t allow because federal law allows you to revoke autopay authorization at any time.

how to stop automatic payment

In fact, if the original automated clearing house (ACH) authorization agreement didn’t include instructions to stop payments, the entire authorization may be invalid and you may be able to recoup all the money that has ever been taken by the company! If your original paperwork doesn’t include instructions on stopping ACH payments, you should consult with a lawyer because this may invalidate the entire agreement – which may mean you don’t have to pay the debt at all!

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Again, I am not a lawyer or a legal professional so you will want to confirm this with someone who is more knowledgeable than I am.

The ability to stop payments is wonderful for consumers, especially when you consider that almost a third of payday loan borrowers overdraft when the payments are withdrawn. Statistics are surely similar for other loans and debts that are accrued by people who survive paycheck to paycheck.

If you want to remove an ACH authorization for any reason, these are the steps you must take.

  1. Contact the merchant directly and revoke your authorization to charge your account.

Although you technically can make this request verbally, the verbal request is ineffective after 14 days if any requests for written confirmation are made… so it’s easier just to start with a written request.

2. Keep a copy of your revocation notice or obtain a cancellation number.

You will need to keep a copy of your letter and, preferably, proof that you sent it. I recommend sending it through email or via standard mail with signature confirmation. This will help you prove that you sent the revocation notice.

If the company sends you a cancellation number, keep that in your records also.

If the company attempts to automatically withdraw money from your bank account again, these documents will help you get your money back.

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3. Notify your bank about the revocation notice.

Submit a copy of the records you have from the previous step to your bank. As long as you notify the bank at least three business days before the next scheduled payment date, they can stop the transaction from occurring.

If you notify the bank and the bank still allows the payment to process, you must respond to the bank in writing within 60 days.

Once the bank receives your dispute, they have 10 days to investigate and one more day to restore the funds. Even if they can’t recover the money from the company who initiated the withdrawal, they are still required to restore your funds. If they don’t, you can sue for the money you lost (including fees), lawyers fees and a penalty of $100-$1,000.

If it is proven that the bank acted in bad faith, they can be found liable for up to three times the amount of money you lost.

And now, a word of warning…

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Please remember that stopping payments doesn’t stop your obligation to the debt. You will still owe the debt. If you don’t pay on time, your credit report will be affected and the debt may be referred to collections or even court. The only thing that stopping payments will do is protect the money in your bank account from being withdrawn.

Get even MORE help! Click here now!

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Nicole leads the Low Income Relief team with over 20 years of professional research and writing experience. Nicole started Low Income Relief after a personal experience with poverty. When her husband was medically discharged from the US Army, their family experienced tremendous financial hardship. Nicole was able to gather help from multiple community agencies and move into a nearby low income housing unit in just two weeks! Since then, Nicole has been dedicated to helping low income families in crisis. She regularly spends hundreds of hours combing through countless resources to make sure that Low Income Relief has the most comprehensive and complete resource directories on the internet today. Prior to starting Low Income Relief, Nicole worked as a novelist, journalist, ghostwriter and content creator. Her work has been featured in various print and online publications, including USA Today, eHow, Livestrong, Legal Beagle, The Daily Herald, The Chronicle and more.

Johnny

Wednesday 8th of September 2021

If I canceled my authorization verbally to the merchant 3 days prior and they still withdrew the money what are my rights? They said nothing to me about providing it in writing when I spoke to them but now I see it says to do it in writing in my contract. I notified my bank as soon as I saw the charges and they won’t do anything because of what my contract says.

Isaac

Monday 13th of December 2021

Information on this should be in the article above. Chat with Lira, she might be able to help! https://lowincomerelief.com/chat/

Chris

Sunday 17th of November 2019

Very helpful article. This will solve my problem. I think that by doing what you said here. I will be able to stop automatic payment withdrawals. Thanks for sharing this article.

Riley Thomson

Tuesday 19th of November 2019

Chris, Awesome! I'm glad you found some useful info! -Riley

Wilson

Tuesday 5th of November 2019

This is the solution to my problem. I think that I will now able to stop automatic payment withdrawal. This article is very helpful for me. I will definitely follow what you said here.

Riley Thomson

Wednesday 6th of November 2019

Wilson, That's awesome! Thanks for the positive feedback! -Riley

FactorLoads

Tuesday 21st of May 2019

I want to stop automatic payment withdrawals. This article is very helpful for me. I will follow what you said here.

Riley Thomson

Tuesday 21st of May 2019

FactorLoads, I'm glad you found some helpful information! -Riley

nick

Tuesday 3rd of January 2017

what happends if u have no money in your bank account and the payment keeps getting returned do they stop automatic payments?

Nicole

Tuesday 3rd of January 2017

Unfortunately, no. Most companies will just continue to try to process the payment until it clears. It's extremely frustrating - but if you talk to your bank, they should be able to stop the transaction.