Bankruptcy and Credit Unions: Part 1 - What Happens to My Credit Union Account When I File Bankruptcy?
By Peter Orville, Attorney at Law on Oct 12, 2007 in Bankruptcy Practice and Procedure, Benefits of Bankruptcy, Chapter 13 Bankruptcy, Chapter 7 Bankruptcy, General Bankruptcy Information, Personal Finance, Protecting Assets In Bankruptcy
A credit union is a banking institution owned by the “members” or customers. A credit union gets money from its members and loans that money out to other members. Credit unions tend to have very strict policies prohibiting members from continuing to be members if they cause the credit union to take a loss over a certain amount (usually $100).
If you are a credit union member, and you tell your credit union that you plan to file bankruptcy, the credit union will anticipate that they will be taking a loss and will generally deny you all further banking privileges including direct deposit, ATM privileges, electronic bill paying, and can even freeze and seize money from your account to cover any possible loss.
If you actually file a bankruptcy without agreeing to fully pay your credit union debts you will not be allowed to remain a member of the credit union. Bankruptcy attorneys will usually recommend that before you file bankruptcy, and before you even tell the credit union that you plan to file bankruptcy, that you withdraw your money from the credit union account and deposit it in a bank to which you don’t owe any money
See Bankruptcy and Credit Unions: Part 2 - “Cross-Collateralization”
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