It’s happened to most of us at one time or another – you check your bank account a few days before payday and see that it’s negative. Or worse, you’re checking out at a store, and your card is declined; then you find out you’re overdrawn. We understand the shock and fear that comes from not having money in your bank account and facing the high fees, but don’t panic. Our team of bankruptcy lawyers in Florida is sharing what you can do when your bank balance is negative.
As we said above, when you discover you’ve overdrawn your bank account, don’t panic. Instead, these steps will help you get back in good standing.
First, look over your bank account and see exactly where the disconnect happened that caused you to go into the negative. Are there suspicious or fraudulent charges that you can contest? Are there mistakes in any withdrawals such as double-charging or a fee that was automatically paid on the wrong date? Fraudulent or mistaken charges can often be removed, either by the bank or the payee who made the error.
Even if there are no mistakes or errors from the bank or a payee, it’s still important to know where you went into the negative and what caused it. This can help you avoid this in the future.
An overdraft fee is a fee the bank charges when a transaction is processed even when you don’t have the full amount for it in the account. For example, if you have $40 in your account and spend $50 on groceries, but the charge goes through at the store, you will have a negative bank balance of -$10. However, the bank may charge a $29 overdraft fee, putting your account at -$39. For each transaction that is processed that you don’t have money in the account for, your bank may charge an overdraft fee ranging between $25 and $40.
A non-sufficient funds fee occurs when the bank refuses or rejects a transaction because you don’t have the money in your account, and then they will charge a fee on top of this. For example, you have $15 in your bank account, but a charge for $50 is requested. The bank will refuse the fee and then will charge an NSF between $25 and $40 even though the payment didn’t process.
Often overdraft fees and NSFs can create a snowball effect of debt. Let’s say three small charges are processed before a deposit goes through. Each of those has a $30 fee, so your deposit is automatically going to be $90 less than what you expected it to be, and it can be difficult to get out of this cycle.
If you rarely have a negative bank balance, call your bank and see if they will refund some or even all the fees. While they don’t do this if it happens frequently, if it’s rare, they will often refund at least a portion to maintain good customer service relations.
If your check is returned or automatic payment is refused, reach out to the people who didn’t get their money, especially if it’s your landlord, utility company, or another bill you’re paying. Inform them that you understand what happened and that you are working to get your account back into good standing so you can pay them. If possible, provide them with a date on which they can expect payment. Doing this may prevent late charges and other fees that come from a returned or refused payment.
An account that keeps a negative bank balance for an extended period of time may be hit with more fees or the account may be closed altogether, so it’s important to get back into the positive.
Once your account is back into the positive, you’ll want to focus on how to avoid a negative bank balance in the future.
A lot of overdrafts come from automatic payments – you forget they’re coming out or they’re scheduled at the worst possible time. Call these companies, whether it’s your car lender, student loan company, or a credit card, and see if you can adjust your due date to one that works with your schedule. Also, set reminders in your phone to make sure you have money in the bank to cover them on the dates they come out.
Write down all your expenses, from consistent costs like rent, car payments, and insurance, to fluctuating costs like dining out, groceries, and gas. If your bills and expenses exceed your income, are there places you can realistically cut back? For example, can you get a roommate to help with rent or your mortgage and utilities, or can you apply for income-driven repayment on your student loans to reduce the monthly payment?
If you simply can’t keep up with bills like credit cards and medical bills, it may be time to consider filing for bankruptcy. This can help you clean the slate completely so you can get a fresh start.
If your bank account frequently goes into the negative, and your bills are too much for your income, it may be time to consider debt consolidation or filing for Chapter 7 or Chapter 13 bankruptcy. This can help you get out of debt more quickly so you can restructure your finances in a way that provides the security you need. To learn more, schedule a free consultation at (954) 922-2283 or fill out the form below to get started.
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