Credit Union Account

[patkatmom]

Hi All - I've been lurking around for a few months trying to gather some info and figure out what we're going to do. Based on our income, we will qualify for Chap 7, but I have a few questions/concerns.

We have our kids college money in a credit union account, I believe it's around 17,000. It is listed under my husband's social security number - will they take that to pay our creditors? When we set it up, we never thought that we would be going through this! We also have a secured loan for $5000 through them as well.

We're currently looking for an attorney, but just wanted to see if anyone had any advice.

[jwbbx]

I was advised by both a Debt Consultant with CCCS and by my attorney to NOT have deposit accounts at the same institution I had debts what would be listed in the BK. I had to move a savings and 2 checking accounts because of this advise.

I have also seen posts on this board where CUs are especially bad about cross collateral takes. As in if it's there they'll grab it.

Why take the chance? Move it before you file while you can still easily open bank accounts. There should be no problem with moving the same amount from one institution to another.

[momof5]

While I cannot say I definately know the answer to your question and every state is different. We had a little off topic conversation one day with our attorney about my daughter. She is headed off to a $36,000 a year college in the fall. I feel so guilty because we are unable to help her. I mentioned how I wished we had started saving when she was a baby and then she would not need to take out the loans she is taking out. (only 6,000 as the rest she received in scholarships and grants). He mentioned that if we had a large savings set aside for her that its not like our 401k but that the trustee would take it. I was baffled... " Trustees take money intended for childs college" He said ' they sure do!" Your childs college is not an expense they count for you.

I still am taken back by that. You would think if a parent has such a savings and can prove it is going to go to educate the future of America that it would be off limits. But then again I guess in my case, no savings for my daughter and she has been able to figure out how to attend without our help. I guess thats what the trustees are thinking.

[Cali]

If you have the money in the bank, like a savings, they can see it as you having a savings account. And if you can afford to have a savings account, but not pay your creditors, they might see it as abuse or something.

[AngelinaCatHub]

We were also warned NOT to have anything in our Overdraft Protection account, as well, because that could be taken. As we were at a negative balance on everything in our CU account when we filed, that wasn't a problem.

[magyar123]

I was advised by both a Debt Consultant with CCCS and by my attorney to NOT have deposit accounts at the same institution I had debts what would be listed in the BK. I had to move a savings and 2 checking accounts because of this advise.

I have also seen posts on this board where CUs are especially bad about cross collateral takes. As in if it's there they'll grab it.

Why take the chance? Move it before you file while you can still easily open bank accounts. There should be no problem with moving the same amount from one institution to another.

But that won't help within the bankruptcy process itself. The money would still be considered an assett as long as even the new bank account is in her husband's name. The credit union won't be able to collaterize, but the trustee would most certainly use those funds.

[FLBK7]

While I cannot say I definately know the answer to your question and every state is different. We had a little off topic conversation one day with our attorney about my daughter. She is headed off to a $36,000 a year college in the fall. I feel so guilty because we are unable to help her. I mentioned how I wished we had started saving when she was a baby and then she would not need to take out the loans she is taking out. (only 6,000 as the rest she received in scholarships and grants). He mentioned that if we had a large savings set aside for her that its not like our 401k but that the trustee would take it. I was baffled... " Trustees take money intended for childs college" He said ' they sure do!" Your childs college is not an expense they count for you.

I still am taken back by that. You would think if a parent has such a savings and can prove it is going to go to educate the future of America that it would be off limits. But then again I guess in my case, no savings for my daughter and she has been able to figure out how to attend without our help. I guess thats what the trustees are thinking.

If the money is in a 529 Savings Plan, it is exempt in bankruptcy just like 401K plans are.