Instead of just closing the account, I'm wondering if there’s a "middle ground" solution. Will implementing an ACH block or a new payment plan with the lender prevent surprise charges and protect my credit score and legal standing?

You can use Cash App, Venmo, Apple Pay, and PayPal for everyday payments. They make it simple to pay, are safe, and are accepted widely.

As you don't want to open a bank account, I suggest the Cash App with a Cash Card (no cash) or the Bluebird by Amex, which doesn't charge any regular fees.