Overdraft protection loan "survived" BK - can we use it if we need it?

[basketsbears]

Hi,

We have not been discharged yet - earliest date for that would be 10/15.

We have an open line just $750 that is actually an overdraft protection for our checking. Can we use that, even before we are discharged? How would we know if it was 'closed'? I am just curious in case we need to use it - maybe could use that instead of applying for a CC?

To keep our % down, if the whole amount was used, and then paid off or under 10-30% when the billing cycle ended would that help our credit?

Thanks!

Lynn

[AngelinaCat]

If you start relying on that overdraft protection loan, it can act just like a 'payday loan'. We have overdraft protection on our checking account and we end up dipping into it every month, then paying a bit back every month, then dipping again, and so on....

Our is $2500.00. 'Hub wanted to cut it down to $500, earlier this year when we get our yearly stipend from a Retirement fund, but because we were having transmission troubles, the Officer at the CU and I persuaded him not to do it. He ended up fixing the transmission himself at a huge savings, and will likely cut the amount in January like he wanted to. Otherwise we max it out every year.

[frogger]

You may can use it, however it probably is not prudent to do so.

The overdraft protection is going to dollar $$$$ you to death. Just because it covers an overdraft check doesn't mean that they won't charge you the return check fee. You also have the prospect of you writing nsf checks being reported to Chex-sys, which is not positive in any sense of the word.

Here's a statement from Chex-sys:

The Chex Systems, Inc. network is comprised of member Financial Institutions that regularly contribute information on mishandled checking and savings accounts

The overdraft coverage will probably remain intact, but it will harm, not help your credit.

[basketsbears]

Hi,

Thanks for the information. No, I am not wanting to use it - just curious in case we would use it.

Before BK when it was being used the checks were never returned, nor was there a NSF fee. The funds were just transferred to the checking account from the open line of credit - which is attached to our checking account if needed. Then interest was charged at 10.25%. So, I wouldn't think anything, but perhaps the interest would change, even if that would. To my knowledge we've not had any problems with the Chex Systems, etc. Now I just don't know???

Thanks!

Lynn

You may can use it, however it probably is not prudent to do so.

The overdraft protection is going to dollar $$$$ you to death. Just because it covers an overdraft check doesn't mean that they won't charge you the return check fee. You also have the prospect of you writing nsf checks being reported to Chex-sys, which is not positive in any sense of the word.

Here's a statement from Chex-sys:

The Chex Systems, Inc. network is comprised of member Financial Institutions that regularly contribute information on mishandled checking and savings accounts

The overdraft coverage will probably remain intact, but it will harm, not help your credit.

[basketsbears]

If you start relying on that overdraft protection loan, it can act just like a 'payday loan'. We have overdraft protection on our checking account and we end up dipping into it every month, then paying a bit back every month, then dipping again, and so on....

Our is $2500.00. 'Hub wanted to cut it down to $500, earlier this year when we get our yearly stipend from a Retirement fund, but because we were having transmission troubles, the Officer at the CU and I persuaded him not to do it. He ended up fixing the transmission himself at a huge savings, and will likely cut the amount in January like he wanted to. Otherwise we max it out every year.

Thanks for the advice. I am not wanting to use it, but there may be a problem this month and if I can't scrape together the $ may have to dip into it. I just didn't know: 1. if the account would still be open if we tried to use it - it shows open, zero balance with $750 available; 2. if we were not discharged yet (if it goes longer than mid October) can it be used without any problems with the BK; and 3. would it be better to just use this account as opposed to having a credit card to rebuild credit? After frogger's advice, I am worried now that it will impact our credit negatively by any use of it. It is actually an open line of credit that can be used to avoid any overdraft problems.

Thanks!

[frogger]

Hi,

The funds were just transferred to the checking account from the open line of credit - which is attached to our checking account if needed. Then interest was charged at 10.25%.

Lynn

Ahh.... missed that earlier. You actually have a line of credit open, not just overdraft protection. Those are 2 very different things. An open line of credit is a good thing.

If you're with a smaller bank, it will probably survive provided that you have not bk'd on the bank. This line of credit should not hurt you.

This might help ease your mind as well:

https://www.consumerdebit.com/consumerinfo/us/en/chexsystems/report/index.htm

[basketsbears]

Ahh.... missed that earlier. You actually have a line of credit open, not just overdraft protection. Those are 2 very different things.

If you're with a smaller bank, it will probably survive provided that you have not bk'd on the bank. This line of credit should not hurt you.

This might help ease your mind as well:

https://www.consumerdebit.com/consum...port/index.htm

Thanks for the site. Glad to know that the line of credit is better than OD protection. I didn't realize they were different things. I will check out the chex systems site as well.

The bank is actually a credit union that we have been with for years. Nothing was BK with them.

Thanks!