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I requested the closure, and I was mailed my balance and told that my account was now closed, all dome in writing through the messaging system. Weeks later they paid my rent. Now they want me to repay them, even though I completely closed the account weeks earlier. They are trying to say that since it was auto-pay, that I was responsible for stopping the payment. My problem with this logic is that the account was closed. It should no longer exist. How does one auto-pay from an account that no longer exists? They are saying that the system "force re-opened" my account. IS this a real thing? Can anyone explain how I am responsible for payments made from an account that was closed weeks earlier?

chicks
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jesse banwell
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    Was this an auto-pay that you set up with your bank, or a direct debit that you set up with your landlord? – user253751 Sep 13 '22 at 13:42
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    Did you sign an agreement with your landlord about these automatic payments? Did you inform them about the closed account? – JMac Sep 13 '22 at 13:51
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    What does the agreement between you and your bank say? How about their auto-pay terms of service? – A C Sep 13 '22 at 14:02
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    How is the landlord dealing with the unexpected payment? – Jiří Baum Sep 13 '22 at 14:07
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    This is similar to writing a check from a closed account. The bank will expect you to cover it. There's a whole Seinfeld episode based on this where Jerry cashes a bunch of checks he got from his grandmother over the years. – JimmyJames Sep 13 '22 at 15:29
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    My bank agreements have generally been clear that they can do this and I will be responsible. (Unfortunately, the consumer power in this case is pretty weak.) As per, @AC, what did your agreements say? – prosfilaes Sep 13 '22 at 15:40
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    If you needed to pay your rent, then pay the bank back because that's your rent. If you already paid your rent then get your money back. It sounds like you are trying to get free money by omitting these details. – DKNguyen Sep 13 '22 at 18:12
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    In what country/state are you located? The laws which control this situation vary significantly by jurisdiction. Is this an automatically recurring payment which you set up with the bank or with some other entity (e.g. with the landlord or a third party payment processor)? Again, depending on jurisdiction, the laws may be different, depending on what entity initiated the "auto-pay". Was this "auto-pay" something you set up as a recurring transaction? Did you set it up in writing? What is the bank claiming the transaction is? This is all necessary info to be able to accurately answer. – Makyen Sep 13 '22 at 18:48
  • @JimmyJames If I write a check against an account with insufficient funds, it bounces bank with NSF. i.e. No money is sent as their is insufficient funds for the check to clear. – paulj Sep 13 '22 at 19:14
  • What is your desired outcome? Are you looking to avoid paying overdraft fees on top of your rent? That's a likely outcome. Are you not wanting to pay your rent to the bank as a matter of principle? That's more difficult to make happen. Are you trying to leverage the bank's mistake so that you don't need to pay rent at all this month? That's virtually impossible. – Teepeemm Sep 13 '22 at 19:19
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    Would I be wrong to conclude from this thread that I should never, ever set up an autopay mechanism of any kind? If it's true that closing an account doesn't automatically and reliably cancel associated autopay mechanisms (meaning that they can continue to act, zombielike, racking up arbitrarily expensive fees and other repercussions), I would have even less faith that other mechanisms — like, explicitly canceling the autopay — would reliably cancel the autopay, either. It sounds to me like it is not possible, with 100% certainty, not to get stuck in the same position the OP did. – Steve Summit Sep 13 '22 at 21:08
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    @SteveSummit It depends on where you live. In the US, it's a federal crime for the bank to not cancel a preauthorized electronic funds transfer when so instructed (verbally or in writing) >= 3 business days prior to the scheduled payment. The bank is libel for "all damages proximately caused" by the failure to cancel the automatic payment (for bona fide errors, bank's liability is for "actual damages"). However, if the bank fails to follow the rules for resolving errors/unauthorized transfers, including provisionally recrediting the account, then the bank is liable for triple actual damages. – Makyen Sep 13 '22 at 21:38
  • And just to provide a perspective from a different jurisdiction, in the UK, when moving banks, this would typically be covered by the "current account switch guarantee" scheme, which would mean you were not liable for any costs arising from mistakes made by the bank in the switching process. – James_pic Sep 14 '22 at 12:50
  • What jurisdiction? Some of the answers here are very us-centric and would fare well in civil law countries. – Polygnome Sep 14 '22 at 18:46
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    Is this auto-pay a push (set up through the bank) or a pull (set up through the payee)? – shoover Sep 14 '22 at 20:18
  • @SteveSummit IMO this is one of several reasons why you shouldn't set up an auto-pay account. The much bigger reason, however, is that you don't get a chance to catch billing errors before the money leaves your account. You can be over-billed for months before you ever realize it. – bta Sep 14 '22 at 23:21
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    This thread is so sad and discouraging. I wonder if cryptocurrencies (even with all of their faults and risks) will feel more comfortable than this kind of mess that the legacy financial system involves. 🤞 – Ryan Sep 14 '22 at 23:58
  • "(1) Notice. A consumer may stop payment of a preauthorized electronic fund transfer from the consumer's account by notifying the financial institution orally or in writing at least three business days before the scheduled date of the transfer." – Mazura Sep 15 '22 at 04:00
  • "(2) Written confirmation. The financial institution may require the consumer to give written confirmation of a stop-payment order within 14 days of an oral notification. An institution that requires written confirmation shall inform the consumer of the requirement and provide the address where confirmation must be sent when the consumer gives the oral notification. An oral stop-payment order ceases to be binding after 14 days if the consumer fails to provide the required written confirmation." https://www.consumerfinance.gov/rules-policy/regulations/1005/10/#b – Mazura Sep 15 '22 at 04:00
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    Does closing an account 'stop' all payments? Otherwise the bank is bouncing their own checks on themselves. How is that anyone else's problem except the company that makes money by handling money and is doing so poorly. – Mazura Sep 15 '22 at 04:01
  • @Makyen - I'd like to see that with some citations and as an answer.... – Mazura Sep 15 '22 at 04:07
  • @Makyen while true, it is irrelevant. This is not the scenario here. – littleadv Sep 15 '22 at 04:50
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    @littleadv We really don't know what the scenario is here. Without more information, there's a spectrum of possibilities which fit the relatively vague facts we've been given. Unfortunately, the question author has chosen not to respond to any requests for clarification, so we may never know. Stating that it is or isn't one way or another isn't really possible without making significant assumptions. – Makyen Sep 15 '22 at 05:09
  • @Mazura In the US, the primary laws which govern electronic funds transfers (EFTs) are in Title 15 section 1693 of the US Legal Code. Everything I mentioned above is contained explicitly in there. There's considerably more at both the federal and state levels, but the minimum consumer protection/rights with respect to EFTs is contained in 15 USC § 1693. – Makyen Sep 15 '22 at 05:24
  • @littleadv If someone does not give their jurisdiction where relevant and uses abbreviations unknown to the audience, then... they are American? What? – MackM Sep 15 '22 at 17:56
  • If you found a wallet on the ground, and there was ID in it, so you know whose wallet it is, are you legally entitled to keep the money in it? And how is this any different? The bank mistakenly paid your rent, but it's still THEIR money, whether you feel like giving it back to them or not. – Dawood ibn Kareem Sep 15 '22 at 19:25
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    "Of the approximately 1.5 billion people who speak English, less than 400 million use it as a first language" "spoken at home by the great majority of the U.S. population (approximately 78.5%)" "United States/Population 329.5 million" - so yeah.... OP isn't ESL by my estimation. ~256M Americans are 'EFL' out of those 400M; more than half. This isn't ELU.SE which is disproportionately British. Nor ELL.SE which is that, and Indian. But also yes, we're jerks and it's a dead give away. In America, bank errors are in your favor. – Mazura Sep 15 '22 at 19:45

8 Answers8

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You cannot make a financial gain from this situation

Not only would be immoral, it's just not how it works. Regardless who's fault it was that the payment was made, if they paid your rent, you owe them the money. At best, you might be able to tell them to reclaim the money from your landlord and pay your rent yourself, but there is no free lunch.

If you've already paid your landlord, or if you are no longer paying rent, then the bank should deal with the landlord to recoup the money.

Don't accept a financial loss either

From the situation you describe, the bank does seem to have made a mistake. Do not accept to pay any administrative fees/overdraft charges or other costs that the bank might try to tack on.

Grooke
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    The issue is that they may ask him to sign papers with unknown content. I don't want to be in such situation as it is wasting time and is risking signing something that is not in my interest. – akostadinov Sep 13 '22 at 11:31
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    Surely if the OP has severed his relationship with the bank, they have simply made an unsolicited gift to the landlord? OP has no involvement other than incidentally being the landlord's tenant. What he cannot do, though, is claim that that unsolicited gift is his rent payment, because he's severed his relationship with the bank. – Andrew Leach Sep 13 '22 at 13:22
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    @AndrewLeach If you view it that way, he still has to pay the rent, and then the bank can ask for their "gift" back. But it comes out the same. – Barmar Sep 13 '22 at 16:36
  • @Barmar: Another possibility is that the landlord received payment from tenant and also received money from the credit union. What would be equitable for everyone concerned would be for the bank, landlord, and tenant to agree that the landlord will regard the bank's payment as an advance on the following month's rent, and that the tenant will refund the bank for its erroneous payment on the day when the rent would normally have been paid, but all three parties should agree in writing that things will play out that way. – supercat Sep 13 '22 at 20:29
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    @Barmar That is true but the actual rent payment is between OP and their landlord, the bank has zero role in it. The mistaken payment from the bank to the landlord is just between these two and OP has zero role in it. The bank seems to want OP to pay them back their gift to the landlord, that just shouldn't be OPs problem. – quarague Sep 14 '22 at 09:50
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    @quarague The most likely scenario is that the autopay was set up through the landlord and was not changed when the OP closed his bank account. – Michael Richardson Sep 14 '22 at 15:57
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    This answer is plain wrong. I know it gets a lot of upvotes because people feel uncomfortable being told that they didn't read the contract they signed, but it doesn't make this answer any better. It is plain wrong, incorrect, misleading and damaging to the OP. It should be deleted. then the bank should deal with the landlord to recoup the money. - no. The landlord has nothing to do with the issue. The landlord doesn't have a relationship with the bank. The OP does. The landlord didn't initiate the transaction, the OP did. – littleadv Sep 15 '22 at 02:27
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    @Grooke, How does it answer the question? What made you think that OP tries to gain from this situation? – Peggy Sep 16 '22 at 06:29
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This is fairly standard practice. For a period of time after closing an account, it will be automatically re-opened if a transaction posts to it. I asked about this the last time I closed an account, and they said that there's a number of different reasons that they do this:

  • The former account owner is typically still interested in any deposits that may come in, including refunds that automatically get posted to the card used for the original purchase.
  • Some transactions can take a long time to clear behind the scenes and could be in progress when the account is closed. Paper checks, in particular, have a bad habit of sitting for a long time before the recipient deposits them. The account owner typically intends for those checks to still be honored (otherwise they would have explicitly cancelled them).
  • Paying a charge from the closed account is often times cheaper or more convenient for the account holder. Let's say I have my credit card bill on auto-pay from my checking account that I closed. The bank reactivates the account, pays it, and now I have an overdrawn account plus an overdraft fee. That's not great, but it's far cheaper than the fees and interest I'd owe by not paying my bill on time. Many automatic payments get processed on the due date so by the time you got notification that the auto-pay failed, it's too late to do anything about it.
  • Some changes to bank account information don't take effect until "the next billing cycle". For things billed infrequently (such as car insurance that's paid semi-annually), that could mean that it's not possible to update your billing information before the old account closes. Processing that payment on the closed account is a much more straightforward problem to deal with than trying to figure out how to schedule everything to avoid a failed transaction.
  • It helps the bank recover any outstanding fees that you owe them. The law gives the institution a "right of setoff", meaning they can deduct any unpaid fees you owe them from your account. When a deposit comes in, they can re-open the account, process the deposit, and deduct whatever you owe them.

It's annoying when the account automatically reopens, but in most cases it's less of a problem than what you could encounter if those transactions were rejected outright.

Regarding your specific situation, your options will depend on how this payment was set up. If this was a push-type payment (i.e., you configured your bank's bill-pay system to send $X on the first of the month), then this seems like the bank's error. Since you typically lose access to the online banking portal after closing your account, it's not reasonable to expect you to cancel it. The bank will have to cancel it for you.

If this is a pull-type payment (i.e., you authorized your landlord to charge your account every month), then the bank was not in error. They were honoring in good faith a recurring payment that you authorized. Your landlord might not have billed the correct account or may have auto-billed you even though you already paid via some other means, but that's a problem between you and the landlord. Some banks have ways to halt recurring ACH debits from their side - similar to stopping payment on a check - but you have to tell them which one to halt and it generally requires a fee.

bta
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    This is a good, extensive explanation, even though I find it strange: For example, after my credit card expires no merchant can charge money on it; the transaction is impossible/revoked/bounces, whatever. Your arguments could be applied to credit cards as well, or vice versa. – Peter - Reinstate Monica Sep 14 '22 at 23:41
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    @Peter-ReinstateMonica Sort of. Credit accounts and deposit accounts appear similar but are two very different things, particularly in terms of what the law requires/allows. – bta Sep 15 '22 at 00:18
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    @Peter-ReinstateMonica credit card expiration is known to merchants ahead of time, but we had a question recently about merchants continuing charging a card even though it was reissued due to fraud - which is kindof similar. – littleadv Sep 15 '22 at 00:39
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    @Peter-ReinstateMonica Merchants absolutely can charge money on an account after the credit card you used to authorize the charge has expired. The expiration of the credit card does not expire authorizations to charge the account and a new credit card can also authorize charges to the same account. – David Schwartz Sep 15 '22 at 01:03
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This answer assumes the OP is in the US. It may not be valid for other jurisdictions (especially in Europe). Given the lack of mentions of jurisdictions and implicit assumptions made in the question, I believe it is safe to assume that. If the OP comes back to clarify the jurisdiction, I'll update the answer.

Yes, you are. Even if they made a mistake, the intention was not to gift you rent money, and part of the terms and conditions that you agreed to when you opened the account is to cooperate with the bank in case of such mistakes.

You can ask them to compensate you for whatever costs you've incurred because of their mistake, but you most definitely have to return the money.

If they take it to court they will most likely prevail, and then you'll also need to pay their (and your) legal fees for that action. I see no reason why you'd want that.

In response to comments (and please don't downvote this just because you don't like it or don't think it's "fair"):

Terms and Conditions are a binding contract, even if the account is closed.

It doesn't matter if the account is closed, the terms and conditions the OP agreed to when they opened it are still a binding contract with regards to that account.

That includes the requirement to explicitly cancel all autopay schedules the bank seems to have and the OP apparently ignored.

The general rule of contract law is that contracts are enforceable. Claiming that the contract is "absurd" or "illogical" (as some commenters did) is meaningless in the court of law. In some countries there are rules and regulations as to what can be in a contract, but it is unlikely that a banking institution would be non-compliant.

Errors provisions are almost always a part of T&C.

Without seeing the T&C or even knowing what credit union (CU) it is and in what country, I can say with very high degree of certainty that the errors and mistakes provision is there. It would be an unthinkable malpractice for a lawyer to draft a terms and conditions for a banking institution without such a provision. Mistakes happen, they happen more often than you think, and neither side is supposed to benefit from them and either side is supposed to cooperate with the other on correcting them.

I have this provision in my rental agreement and every property purchase agreement I signed, the banks wouldn't have it? That's an unreasonable assumption.

Sending the CU to the landlord unlikely to work.

Some comments say "the bank sent the money to the landlord - they should ask the landlord to return it". The OP may suggest it to the CU (assuming the rent was already paid), but it is unlikely to hold in court. The bank was acting on the OP's instructions, and as such it will be the OP's problem, not the landlord's.

Asking an attorney.

Clearly, this is a contractual issue, so asking an attorney is always an option. I'm not an attorney. Duly licensed attorney in your jurisdiction can properly evaluate the T&C and your obligations under them and give you an opinion about your chances if the case goes to trial.

I'd be surprised if you get a different answer from the attorney, but anything is possible. It may not be worth it though, attorneys are pretty expensive.

The CU has power.

As mentioned in the comments, in some countries (e.g.: the US), banking institutions have systems to share negative information about clients. Reporting you to such a system may lead to you being unable to open new banking accounts, and having other difficulties in your financial life.

Clarifying some more misconceptions:

Account no longer exists when it is closed - no, that is not true. Closed account is still an account, it exists. Under some conditions it can be reopened by the bank and the owner will be liable (seems like this case fell into that category). Terms and conditions still govern.

Absurd clauses in T&C will not be enforced - no, that is not true. Terms and Conditions is a binding contract, and contract law applies. Unless there's an explicit law overriding the terms of the contract, the contract will be upheld and enforced. Just because you don't like the conditions or you think that the terms are absurd doesn't mean that the court of law would invalidate the contract.

littleadv
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This seems to strongly depend on the jurisdiction you are in. I posted a question on this situation on the law stack exchange.

If you are in the US, the bank is in the right here. Closing a bank account and revoking authorization to make payments from the account are two completely separate things. As I understand it, if you want to end your business relationship with the bank, closing the account doesn't actually do anything useful. You need to revoke the authorization of the bank to take money from the account and also give the bank a stop payment order. If you didn't do that, a closed account will just be reopened and the payments from it will continue as before. This is spelled out in detail in the contract you signed when opening the account.

If you are in Germany or I assume anywhere else in the EU, closing a bank account indeed ends your business relationship with the bank and afterwards it is the banks duty to block any payments to or from the account. If the bank fails to do that, that is their problem. Of course, if the bank makes an erroneous payment in your name you don't get the money. The bank will try to recover it once they notice the mistake and it is your duty to pay the landlord with your own money.

quarague
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Why are you under the impression that the account no longer exists? All of its history and statements are still in the bank's database.

By setting up an autopay arrangement with your landlord, you have essentially authorized them to draft money from your account, similar to as if you had written checks against your account that had not yet cleared when you closed your account. I don't think this has the same potential legal consequences as a bad check, but it may.

Likely the bank is also charging you overdraft fees, with the potential for additional administrative fees due to dealing with your mistake. However, these fees are likely less than the late, bad-check, and/or bounced payment fees that your landlord could have changed you.

In the future, make sure that all autopayments are removed and all payments have been posted before completely closing an account.

An additional point:

Once a bank account is closed, there is generally no going back. However, there is an exception: Some banks may reserve the right to reopen an account if another payment or deposit comes through.

How to Close a Bank Account - Experian

Michael Richardson
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  • I think the autopay was set on the CU side – littleadv Sep 13 '22 at 17:01
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    This is a mistake of the bank, not of the customer. – wimi Sep 13 '22 at 18:11
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    @wimi The OP hasn't stated that, as of yet. Everything he has said so far matches an autopay from an external source hitting a closed account. – Michael Richardson Sep 13 '22 at 18:42
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    @MichaelRichardson Everything OP has said is also consistent with an autopay set up at the bank side. Without clarification from the OP, both seem like reasonable interpretations. – marcelm Sep 13 '22 at 20:00
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    OP wrote they closed the account. Therefore it does not exist anymore. The bank still has data about it, sure but that is completely irrelevant here. – quarague Sep 14 '22 at 09:54
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    I am under the impression that the account no longer exists because the OP can neither put money in it nor withdraw money from it nor file money anywhere, and so on. The OP is not a customer any longer with that bank. That there are still records of a demolished house is not an indication that the house still exists, which becomes evident when you try to move in. – Peter - Reinstate Monica Sep 14 '22 at 23:34
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When a bank "closes an account," they don't remove it from its database tables, they only flag the account to reject certain transactions like ATM withdrawals. Because they have a responsibility to provide historical data (e.g. "back statements"), the inactive account will probably "live on" for several more years.

In this case, the bank forgot (or didn't advise you) to cancel all auto-pay services that you previously set up. These are often implemented by separate computer systems that were added on to the bank's infrastructure back when such services became popular. Think of a bank as a large, distributed, fault-tolerant computer system with many databases and many servers, and you will have the appropriate mental model: the right hand knoweth not what the left hand is doing, but it works as one big machine.

And since I'm supposed to answer the question... Yes, you owe them the money. Just pay them, and move on with your life. Sure, it is worth asking them to return any fees they charged you, politely, but accept whatever answer they give. There is an emotional cost to allowing your "blood to boil."

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    Technical details are irrelevant for the law. OP cancelled the account, and with that, the contractual relationship between them and the bank end. The account legally doesn't exist anymore, even if historical data is kept. If the bank erroneously transferred money from a now defunct account, this is the banks fault. the bank can reclaim the money from the person they gave the money to, but they have no claim whatsoever against the OP. If the bank isn#t able to maintain heir systems properly, thats not OPs problem. – Polygnome Sep 14 '22 at 18:51
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    @Polygnome "OP cancelled the account, and with that, the contractual relationship between them and the bank end" - citation needed. That is not in fact true, the contractual relationships don't add just because the OP asked to close the account. Read your own bank account T&C again. – littleadv Sep 14 '22 at 23:10
  • @littleadv I don't know about your jurisdiction, but in mine, I have a contract for my bank account, and "closing the account" means cancelling that contract. After that contractual relationship has ended, the bank cannot magically out of thin air create claims against me -- at least not any that would hold up in court. Again, if the bank is unable to get their systems in order and erroneously sends money from a closed account, that is not my problem. They are legally entitled to the money, but need to sort that out with whomever they gave it to. It was not my money, it is not my problem. – Polygnome Sep 16 '22 at 00:06
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    @Polygnome well, I don't know about your jurisdiction, but I've lived in two different countries (US being one of them) and that's not how it works in either. Closing the account changes the status of the account, but it doesn't invalidate the terms and conditions you agreed to when you opened it. – littleadv Sep 16 '22 at 00:07
  • @littleadv Have you ever lived in a country that uses civil law? Because yes, as soon as the contract ends, the T&Cs are irrelevant. You cannot create extra-legal obligations with T&Cs. This is what I often hate about this network, no country tag given and everyone assumes it is the US or that everything works everywhere just as in the US or common law. Which is often unimaginable to people from other jurisdictions. If I close my bank accounts, it is gone, and that contractual relationship with my bank has ended. – Polygnome Sep 16 '22 at 00:10
  • @Polygnome I'm not a lawyer, so I don't know what "civil law" means. But if the T&C says that you have to explicitly cancel autopay and you don't - then you're in violation, whether you think it is civil or not. As I said in my comments to the question - when the poster makes no references to jurisdiction, on this site it is almost certainly a US poster. – littleadv Sep 16 '22 at 00:13
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    @littleadv In law theory, there are two big types of law systems. Common law is mostly used by the US and the anglosphere. Civil law is prevalent in continental europe. Those are two different doctrines. In Civil law tradition, people enjoy a whole lot more protections than in common law, and what you can and cannot do with T&Cs is severely limited. This has nothing to do with being "civil", although I'd argue that civil law is indeed far more civil -- hence the name. – Polygnome Sep 16 '22 at 00:17
  • @Polygnome Thanks for the explanation. Just read up on this on Wikipedia, my experience is mostly with the common law world (I did live in Europe as well, but as a child, so not much experience with the civil code of that country). In the US specifically this scenario is no-brainer (IMHO), hence my answer. In the other country I lived in (also common law) the results would be very similar although some of the counter arguments that were brought here would apply in theory. – littleadv Sep 16 '22 at 00:26
  • Obviously OP is not the first one this happened to. It seems in some countries the account exists but is closed, so the bank pays and asks the account holder for the money back. In other countries the bank might have no right to get the money; in those countries they would obviously not pay. – gnasher729 Jan 19 '23 at 14:18
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If you setup autopay with your landlord and didn't cancel it, this is your mistake and you have to make it right. You aren't quite specific enough for me to say this is for sure what's happening, but that's what it sounds like.

Were you expecting the bank, who has had no prior contact with your landlord, to somehow tell your landlord to stop pulling funds from your account? You authorized your landlord to pull funds from your account and then you closed that account without telling your landlord. That means your landlord still had your authorization to use that bank to access your funds.

The bank had no way of knowing that you no longer wanted to pay your landlord. If you set up alternate payment arrangements with your landlord, then the pull was their mistake and you can try to get them to make good. But the bank only did what you authorized them to do, an authorization you never revoked.

David Schwartz
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    Couldn't the bank just respond "Sorry, that account you're trying to pull funds from is closed. No can do"? – justhalf Sep 15 '22 at 07:59
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    @justhalf They could, but that would be awful for everyone involved. That bank wouldn't get paid. The landlord would incur a bounced payment fee despite having done nothing wrong. The account holder would have all the issues associated with having issued an electronic check on a closed account and likely owe his landlord bounced payment and late payment penalties. Everyone loses. – David Schwartz Sep 15 '22 at 08:19
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These answers may be correct, but they are rather depressing.

One would assume (I think reasonably) that closing the account an automatic payment is tied to would also cancel the automatic payment, especially as there would be no way to manually remove the automatic payment after the fact (at least on any bank website I use here in NZ). Therefore it's very unreasonable for a bank to continue to enact the automatic payment on an account that is now closed and inaccessible to its original 'owner'.

I actually called one of my banks to ask, and they confirmed any authorised direct debits would fail and automatic payments from the account would be declined, so at least in NZ this would be very much the banks fault if this happened and not the responsibility of the (ex) user - at least as far as they were able to ascertain.

Aaron Cole
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    Whether its depressing or not is a matter of priorities. Assume I have some debt which is due on September 15th, I would much rather have a new debt created on September 16th to cover an overdraft from the 15th on a closed account than to have a missed/late payment for an old debt which was due on the 15th.To me, it is very important for my debts to be paid on time and it is often much cheaper to cover an overdraft +1 day of interest instead of 30 days of interest + missed payment fee from the original debt. A bank paying a payment I forgot to change, out of a closed account, is a favor to me. – David Jacobsen Sep 16 '22 at 13:29
  • I see your point, but I still disagree. Its like when a bank opens up an unarranged overdraft for you instead of just declining a POS transaction and then charges you for the service. I would FAR prefer the payment just be declined. If I honestly forgot to make other arrangements after CLOSING MY OWN ACCOUNT, thats on me and I would expect the bank to stop all transactions to and from the account. if I didn't forgot but the bank decided to take matters into its own hands I would be marching in there and demanding they rectify the situation. – Aaron Cole Sep 18 '22 at 22:34