Unpaid Items – why?
It can be frustrating when a Direct Debit gets returned unpaid. Understanding why and when this happens – and the actions that you should undertake as a Service User, will help ensure that fewer items remain unpaid.
So, why are Direct Debits returned unpaid? Bacs highlight 3 categories that unpaid items fall into:
1. When the paying bank is giving advice of change of circumstances to the DDI or the payer’s account to the service user, e.g. instruction cancelled, account moved or closed, payer deceased
2. Where the payer disputes the due date, amount or frequency of a Direct Debit either following receipt of an advance notice or as a result of an outstanding dispute with the service user, e.g. single payment stop. The collection has been stopped by the payer no later than close of business on entry day
3. Where the paying bank is referring the collection back to the service user as notification of non-payment e.g. Refer to payer. In this instance, the account details haven’t changed but the bank is unable to pay the Direct Debit. Often this is due to insufficient funds (or the lodgement of an arrestment or third party debt order (formerly garnishee order) no later than close of business on entry day) but this is not the only reason.
The actions that you should take as a Service User will be different according to why the Direct Debit has been returned unpaid. The information about why the Direct Debit has been returned unpaid is available in a Bacs report, which is dealt with further on.