Suppose I borrow money from X and I authorize my bank to make monthly payments directly from my checking account. Now, I want more flexibility by paying either online or by check. X refuses to let me do this. But my bank refuses to "stop payment" on these tranfers even though its my money and it has no obligation to X. What's the law on this?

Hmm, I suppose you’re from USA. Don’t know the laws there, but here in Slovenia, we handle things like this by calling and yelling at the lady on the other side and things get fixed… eventually.

But I assume there’s a more diplomatic way available… it just takes more time.

Nevertheless, I’m sure your bank cannot tell you what you can’t do with you money. I’d threaten them I’m gonna change the bank or smthng.

You probably signed an authorization allowing X to execute the monthly draft to your account. READ IT.
If you signed an authorization created by your bank, i.e. their form, you probably have the right to revoke the authorization and stop X from drafting your account at any time.

If you signed X’s standard form, you may have given X the right to continue to draft from your account until THEY decide to stop the draft or until a given number of payments is reached or a total is reached.

For example:
I had a hard time explaining something like this to my daughter who was about to sign a gym membership application and finance agreement that would allow the gym (or their assignee) to draft her account for 24 months, regardless of whether she continued the gym membership or not. A little persuasion convinced her that a 90 day membership was better than a 24 month commitment.

If you have signed a mortgage or loan agreement or even a revolving credit agreement, you may have no flexibility in the matter and your bank may be right in informing you that you have no latitude in this matter.

Similarly, if X has assigned the payments to someone else, also known as “selling your paper”, then your rights to modify the payments and the method is probably severely limited.

READ WHATEVER IT WAS YOU SIGNED, AND DO SO IN THE FUTURE.

This is not legal advice, so take this information at your own risk, but in a former life, I worked for five years as a customer service rep for a major U.S. bank.

My suggestion “back in the day” would have been to change your checking account to a new number-actually close that current account, and open a brand new account (with that same bank).

The draft that the issuing party is sending to your bank each month is only linked to that current checking account number (i.e. the draft came about by you giving that party “X” your checking account number and the bank’s 9-digit ABA routing number).

When you initially authorized the draft, you either gave party X a ‘blank’ check with the checking account number, or you gave them the account number verbally. Either way, you gave your consent for them to draw against your account, which is a contract the bank is neither responsible nor liable for.

Unless the very first draft they made out of your checking account was reported and disputed from the very first withdrawal as unauthorized, as far as the bank’s concerned, you have given your consent for that issuing party (X) to continue to withdraw from your bank.

At best, banks can only place a stop payment on the dollar amount, but because it is not a ‘physical check’ there is no check number to place on the system alert, and all the issuing party has to do is change the amount by $0.01 and the stop payment would be rendered ineffective.

A change in account number should remedy the situation unless the issuing party of the draft has a court order to garnish wages, but paperwork on the judgement would need to be filed with the bank for that type of withdrawal to be lawful or continue with the new account number. Examples of this are with alimony or child support, IRS levies (e.g. for unpaid back taxes) or other court-enforced judgements/liens/levies.

YMMV-so don’t take this for legal advice :) good luck