Legal Question in Credit and Debt Law in Iowa

In July, I was contacted by a company wishing to make payment arrangements for a student loan. I made arrangements, allowing their company to withdraw a set amount from my checking account each month. After making 2 payments, my account with this company was sold/transferred to another collections agency. This 2nd company called me, wanting to make payment arrangements also. After verifying that they were collecting for the same student loan (I only have one student loan) and making sure the account was received from the first collections company, I didn't make payment arrangements with them (due to lack of funds). However, the first company has been making electronic withdrawals on my checking account, even though they no longer own or service the account. They won't even discuss the issue with me because "It isn't their account". Is it legal for a company to continue to use the information gained on this payment arrangement to withdraw funds for an account they no longer own? Also, my bank has said that they can't put a stop payment on these withdrawals because it isn't a paper check. They tell me that my only option is to close the account and re-open another checking account. The first company's electronic withdrawals have now overdrawn my account over $200, and I can't close the account until the balance is brought back to zero. Is there any legal recourse against the first company for these fees they have incurred on my checking account, despite not being involved at all with the collections effort concerning my student loan?

Asked on 11/17/09, 1:49 pm

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0 attorneys agreed

You might have the basis for a suit in small claims court but I think a letter from your attorney would have more persuasive power.

Answered on 11/22/09, 11:14 pm

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