Paypal is 'country specific' so advice often depends on what country you are in. As you have not added your country to your community profile or said in your post then we can't help at the moment.
Advice is voluntary. Kudos / Solution appreciated.
I'm in the U.S. and having the same problem. My client had to cancel his credit card because of fraud and forgot to change his PayPal account. Everything has been fixed and his last payment has processed but it won't let me reactivate his automatic payment.
