Many Maryland residents are familiar with automatic payments, a tool used by lenders and creditors where payments are automatically deducted directly from a person's bank account. Generally, the majority of these automatic deductions are for monthly payments of things like home mortgages. In addition, an automated debt payment agreement may have been set up between you and a creditor as part of a debt relief agreement.

Automatic payments can indeed be very helpful and easy to use, but if you are not careful or don't fully understand the agreement that you signed, it could end up causing you more grief than convenience.

Recently, a federal judge refused to throw out a court case alleging that Bank of America was incorrectly and perhaps purposely using an automatic payment option to extend the maturity date of a loan for two homeowners. The claim is that Bank of America was routinely withdrawing payment for a mortgage loan after the agreed-upon payment date and -- contrary to the automatic payment contract -- applying more of the late payment amount toward interest instead of the principal on the loan. In doing so, the loan repayment period ended up being extended an additional 13 years, despite the fact that the automatic payment agreement clearly stated that the funds were supposed to be removed on a set date.

Bank of America claims this was simply an error and not part of a grand scheme to defraud the couple out of thousands more dollars, but the class action lawsuit filed against the bank states that technique was likely a more widespread occurrence.

The lawsuit filed against Bank of America should serve as a warning to Maryland residents who use an automatic payment system. You should pay close attention to how and when your money is removed your bank accounts. If you and feel like your bank or creditor is not fulfilling the terms you agreed to, an experienced attorney can help you investigate and determine what your best course of action is.

Source: Courthouse News Service, "BofA May Be Liable for Furtive Interest Charges," Bonnie Baron, Jan. 12, 2012