Complicated credit issues involving a car...argh!!!

I used to own "Car A". For a long time I went back and forth from lender sending in info to have monthly payments auto withdrawn from my checking account. Recently on March 2nd, i traded in "Car A" for another one.

According to the original lending bank, my payment for February went over the 30 day limit and not only was 1) my credit reported but 2) I was sent to collections. At first I thought it was solely the fault of the dealer I traded my car into being so late sending in the payoff. but after learning something late last night, that might not be the case.

It would seem the old bank got ALL my paperwork organized on February 13th. My payment (before it would be late in any way) was due on the 16th. They said they could not process my auto withdraw for February in 3 days (even though it's not considered 1 day late until AFTER a 10 day grace period). So instead of going ahead and processing and letting me know what was going on (by phone or email or snail-mail), they simply put the papers off to the side and NEVER processed my auto withdraw, even though they had everything to do so.

Now, during this whole scandal of thinking I was late due to dealer not paying off loan, i find out it's mainly because old bank never processed my auto withdraw. I need to know how to handle this. My credit has been affected and it HAS TO be fixed. Do I go to the original lending bank and have them fix my credit or to the dealer for being late in the payoff (because they took ownership before the February pymt was considered late)?

Go to both places... especially if the dealer is connected to the bank.

Make big waves at the bank. They have done the unconscionable.