Can an Overdrawn Bank Account Be Sent to Collections?



Do you have some old bank accounts sitting in the corner? If you aren’t too careful, these accounts may impact not only your credit score but also the amount your debts will cost you in your lifetime.

This is why it is important to understand more about overdrawn bank accounts and whether these can be sent to collections or not.

Will Your Overdrawn Bank Accounts Be Sent for Collections?

Yes, bank accounts will and are usually sent to collections. If you end up overdrawing your money market, checking, or savings account and you didn’t make a timely payment of the funds to repay the excess, your bank may refer your account to a collection agency or its own collections department.

How Do Checking Accounts Get Overdrawn?

There are several reasons why checking accounts get overdrawn. The first one has something to do with overdraft fees. You will be charged an overdraft fee if the value of items presented for the payment costs higher than your checking account’s available funds.

Overdraft fees often range from $25 to $35. If the overdraft item is covered by your bank, you need to repay the total overdrawn together with the fee for your balance to be right back on track.

NSF or non-sufficient can also cause checking accounts to get overdrawn. Banks charge a fee for non-sufficient funds if there is an item presented for payment but there are no funds available. While this amount may be lower than an overdraft fee, the return fees will continue adding up. Every new item that is presented for payment while you have a negative checking account will incur a non-sufficient funds fee.

If you are unaware of the extra or monthly fees charged by your bank, your account might not have sufficient amount to pay them. However, the fees will still be debited by the bank, thus putting your account balance in the red.

Is Your Credit Affected by an Overdrawn Bank Balance?

Having an overdrawn bank account alone won’t affect your credit as long as you take care of the problem immediately. But overdrawn balances sent to collections may still appear as negative items on credit reports. it may lower your credit score and make it harder or even more expensive to get credit.

How to Get Bank Accounts Out of Collections

Generally speaking, you have to pay the debt’s balance to get your bank account out of collections. When your account is in the department of collections of your bank, you might simply need to deposit funds to the account to cover your owed amount to the bank.

Old accounts, however, might present a few hurdles. If you didn’t address a negative balance on your old account, your bank might have already closed your account with your debt sent to collections. This process is called a charge-off, with your bank often initiating it after an account is past due within a period of 60 to 90 days. You need to pay the debt collection company for the account to get to paid standing.