23 May Credit Union’s Application of Automatic Payroll Deductions to Vehicle Loan Violates Bankruptcy Protection
Once a bankruptcy is filed, a credit union may not apply funds received from a bankruptcy debtor’s paychecks by means of an automatic payroll deduction to the payments due for a vehicle loan, according to the Eighth Circuit Bankruptcy Appellate Panel.
In this case, In re Krivohlavek, No. 08-6047 (8th Cir. BAP May 22, 2009), the appeals court reversed a bankruptcy court’s ruling that because the debtor could have stopped the automatic deductions herself, she was ultimately responsible for the loan payments having been made.
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