Can a bank make me pay off a loan after I’ve already paid it off because they lost the payment?

On 06/07 paid off the remainder of my car loan in person with a cashier’s check. I was given a receipt, which I still have, and the title to my car. The car is now sold and the title is in the buyer’s name. The bank has lost the cashier’s check and is telling me that I still owe them the remainder on the loan plus they are saying I’m late on my payment. The cashier’s check I gave them was from the person buying the car from me. We specifically brought a cashier’s check and went to their main office because it was the only way that we could get the title that day. The bank no longer holds the title.

Asked on July 22, 2010 under Bankruptcy Law, Vermont


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

Legally, once you have paid a lender or creditor, you have fulfilled your obligation. What happens to the money after that is the lender's concern, not yours. The key issue, though, is whether the check has been cashed. If it was cashed--even if not by the bank (e.g. it was stolen by an employee)--then if you can prove you gave the check to the bank, it is now their responsibility to recover the money from whomever took, cashed, etc. it. If the check was never cashed, however, the issue is less open and shut: while your receipt shows you provided the check to them, if it has been lost before being cashed, it's not unreasonable for the bank to ask for a check to be reissued. After all, if the check was not cashed, in a very real sense you have not paid the money. If the money has not been paid BY you, it can be argued it has not been paid TO the bank. In the event that the check has not been cashed, to avoid a legal fight with the bank (which fight you may lose), the best course of action may be to cancel the check and pay the bank again. However, at the same time, it would be reasonable to first get fromt the bank a commitment that it will cover any additional expenses or fees you incur.

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