Banks and their bankrupt customers

[cleopotro]

Do credit unions allow customers who discharged debts with them through bankruptcy remain customers?
Is it wise to discuss this subject with them prior to filing? (I like my credit union but still don't want to reaffirm my debt)
Your comments and/or advice will be appreciated.

[AngelinaCat]

Hi cleopotro: welcome to the forum. We hope that you will find the feedback here helpful.

With that said, yes, if you are planning to file a BK, you need to talk to your banking institution. The different banks have different policies, and the large mega-banks are probably the least friendly to work with. If you have a local institution that you can bank with, that is probably best. The longer the history you have with them the better for you as well.

Make sure that whatever institution that you end up using for your checking and/or savings accounts, is not the same one that you have a home loan, a car loan, or any other type of loan with. Because if you do, and you default on any of those loans, the institutions--depending on the fine-print mice type in your agreement papers, will give them the right of offset. That is, they can go in to your checking/savings account and raid it to satisfy a deficiency, WITHOUT notice, and there you are high and dry with a worthless check to pay for a child's braces. That is an example.

A Credit Union can be a friendlier place, but not at first, because a CU is a consortium of its members who have agreed to pool their collective funds for the benefit of everyone in the consortium. If any member has to declare BK, that is considered a 'taint' on the membership, and the memberships' ability to do business, and you will get a 'nasty-gram' informing you that your bad financial habits have let down the group and your accounts will be closed and, yada, yada, and so forth.

My husband had been a member of his CU for about 40 years, and wished to remain with them. He called their BK department, and talked with them, and was polite cool and calm. We reaffirmed a car loan that only had about 12-14 months left to run, and an overdraft protection loan.

They thawed our accounts, and even reversed the NSF fees that had accumulated during the several days that our accounts were closed. We had a tense period of several days while this happened, but it worked out, and did so because of a long history with the CU, and 'Hub's willingness to talk with them.

Now, we chose to reaffirm our two loans. If you don't wish to regarding yours, that is something you need to talk with them about.

That was back in 2007. We are still with the same CU.

Good luck to you!

[keepmine]

Take the previous posters advice to heart.
Open a bank acount elsewhere prior to filing or even discusing a pending bk with a credit union. Just be sure the new bank isn't Wells Fargo. They have a habit of freezing funds once they see a bk being reported even if they're not a creditor.

[basketsbears]

So if there are no loans with credit union that have a balance one should be OK?

[btbeme]

So if there are no loans with credit union that have a balance one should be OK?

A general Best Practice is to not bank where you owe money if planning to file BK. A loan with no balance isn't really a loan. But...

...in reality, banks often do things from a knee-jerk reaction to receiving a BK notice (hence the warning above about Wells Fargo). Rightly or wrongly, if they freeze your otherwise valid account, it takes time and effort - sometimes a lot of both - to "unfreeze" it.

Open communication with a bank is important if you think something could happen.

Now, having debts that will be discharged at the same place you bank...that is generally bad juju. Do a search for this on the forums and see what normally happens. The quick answer is that in almost every case a bank can and will seize your assets on deposit.

[ValleYum]

So if there are no loans with credit union that have a balance one should be OK?

Block your phone number (LOL) and call and ask them what their BK policy is. Better safe than sorry, IMO.

[basketsbears]

Block your phone number (LOL) and call and ask them what their BK policy is. Better safe than sorry, IMO.

Great idea!