Your relationship with a credit union once they learn you filed

[Denart]

How is your relationship with a credit union affected once they learn you have filed BK. I have checking and savings, as well a auto loan with them. The auto loan will be paid off in 4 months. I have not filed a bk yet. Will they, can they end our relationship, checking and savings because I have filed a BK.

[AngelinaCat]

It's not necessarily the case with every credit union, but here is what happened with ours:

We have a checking/savings account, an overdraft protection, and at the time an auto loan with about eight more months of payments to go before it was finished. When we filed, our CU closed our accounts, since a credit union is made up of members of 'good standing' and it is dependent on the solvency of the membership for its own survival.

With all of that said, my husband ('Hub) had a relationship with this CU for more than 40 years, we wished to stay with it. That meant we had to reaffirm the car loan and the overdraft protection--which we wanted to do anyway. Our attorney filled out reaffirmation papers, and her assistant--not a paralegal--talked to the CU on the phone, and we filed and sent off the reaffirmation papers.

It turned out that the attorney's reaffirmation papers were not sufficient, and we had to fill out and get notarized, paperwork from the CU. It should be noted that we live in Florida, and the CU is in Dayton, OH, so we had snail-mail lag time at play here. The CU had to present all the paperwork before their judge in Dayton, but we were approved and did not have to appear in person. 'Hub had also called the BK department of this CU and had several good conversations with them.

We had a period of about 10 days before all the paperwork got sorted out, where we could not pay bills, and auto draft payments and checks were not honored. But once everything got sorted out and we were reinstated, the CU honored the outstanding checks and reversed the NSFs that had accrued.

And we have been good ever since. I hope this helps.

[nickifan]

It's not necessarily the case with every credit union, but here is what happened with ours:

We have a checking/savings account, an overdraft protection, and at the time an auto loan with about eight more months of payments to go before it was finished. When we filed, our CU closed our accounts, since a credit union is made up of members of 'good standing' and it is dependent on the solvency of the membership for its own survival.

With all of that said, my husband ('Hub) had a relationship with this CU for more than 40 years, we wished to stay with it. That meant we had to reaffirm the car loan and the overdraft protection--which we wanted to do anyway. Our attorney filled out reaffirmation papers, and her assistant--not a paralegal--talked to the CU on the phone, and we filed and sent off the reaffirmation papers.

It turned out that the attorney's reaffirmation papers were not sufficient, and we had to fill out and get notarized, paperwork from the CU. It should be noted that we live in Florida, and the CU is in Dayton, OH, so we had snail-mail lag time at play here. The CU had to present all the paperwork before their judge in Dayton, but we were approved and did not have to appear in person. 'Hub had also called the BK department of this CU and had several good conversations with them.

We had a period of about 10 days before all the paperwork got sorted out, where we could not pay bills, and auto draft payments and checks were not honored. But once everything got sorted out and we were reinstated, the CU honored the outstanding checks and reversed the NSFs that had accrued.

And we have been good ever since. I hope this helps.

Yikes. I just opened a new account (checking/savings/debit card only) with a local CU precisely to get away from Chase Bank, where I have a CC that will go on the matrix list....it didn't occur to me that a CU might close me down as not being in "good standing"??
I don't really want to CALL the CU and find out their policy on members who file BK ...any advice on how to get this info??

Also...my Chase statement shows my checking account balance as zero -- I thought it would be a negative number because I only had $8.73 in it at the time they usually charge a $20 monthly service fee. The savings account still has the dollar in it...technically is the checking account "closed"??

[klandsb]

Nickifan. If you just opened the new account with the CU and owe them no money I dont see any problems with your account. I opened an acct with a local CU who I owe no money too and nothing has been said ... After I confirmed my paycheck was deposited at the new CU I closed my other ck'g at the bank I had an overdraft on to which I owe money...

[anime-chicka]

The credit union I'm with didn't blink an eye when I filed. But then again, I didn't have any debts with them, so they didn't need to care. I keep my account in good standing and haven't had any issues (aside from some fraud, but they got the money back into my account relatively quickly).

The CU that holds the 2nd mortgage to our house, however was a different matter. Everytime I went in to make a payment, they'd hold it until the very last moment before sending it on for processing. After the third time, I called and gave them a piece of my mind. Yes, I was in bankruptcy, but seeing as I wanted to keep my house, didn't it make sense for me to keep making my payments? Obviously they'd never dealt with anyone who kept paying their debt while in bankruptcy. I also think a call from my lawyer changed their tune as well, because the next month I went in, they took the payment no questions asked.

They also tried to close down the joint checking that had the member fee in it and tried to apply it to the 2nd mortgage. A whopping $5. Another call from the lawyer stopped that.

Hubby and I plan to refi after the 2 year period is up just to get rid of this CU. Their customer service is terrible and they have a huge issue with getting 1099's corrected. Every year I have to have them fix it because they can't spell hubby's last name right, despite it being right on the statments.

[nickifan]

Nickifan. If you just opened the new account with the CU and owe them no money I dont see any problems with your account. I opened an acct with a local CU who I owe no money too and nothing has been said ... After I confirmed my paycheck was deposited at the new CU I closed my other ck'g at the bank I had an overdraft on to which I owe money...

Yes, that's my thinking. They have no dog in this fight, so to speak, so they shouldn't bother me. But Angelina's post did concern me, because I wasn't aware of this "good standing" factor. As long as there is money in the CU checking and I don't overdraft, I would think I'd be okay.

I'm looking forward to a day when I am employed again and can have a direct-deposit of a paycheck to the CU! That's one reason I have no fear of not qualifying for Ch 7 --- I have NO income!

[AngelinaCat]

Hi nickifan: whether the phrase "good standing" was actually in the 'nasty-gram' we got, I can't remember, but that was the tone of the letter. Keep in mind that this was a 'one size fits all' type of form letter that we got as a formality. 'Hub had several telephone conversations with the CU personnel which were much friendlier and helpful.

I probably should have rephrased that statement. Sorry

[Spagal]

ugh. Now I am nervous. I just opened a checking acct wth the CU B that holds my auto loan because I am afraid creditors will try and dip into my long standing checking acct that I previous used to pay online payments, this is with CU A.

I owe no debts to CU A and would keep banking with them except for the fear that my account number had been compromised.

I opened the checking at CU B so they could auto draft my car payment since I plan on keeping that.

What should I do at this point? I plan on keeping the car in any event but I do not want my bank accts messed with which was the whole point of moving my funds out of the reach of my CC which will start being unpaid this month as I prepare to file in April/May.

[ToughTimes]

We had a CC debt with our credit union, and I also had a line of credit with them, though we owed nothing on that.

We also have savings/checking at this credit union. I've been with them since 1973 my checks say.

Once we filed, my CC disappeared from the online access area. I got a letter telling me my line of credit was not available to me. The checking and savings accounts were unaffected and I have continuously been able to access them online.

[HakunaMatata]

While I recommend treading lightly, I tested the CU waters. In my situation, I had a credit card I intended to discharge and a recent auto loan I intended to reaffirm. To my surprise the CC (which was full of my CU's logos) wasn't directly offered/managed by my CU (InfiBank was the creditor...this is common in the CU industry). I had paid bills for years though this CU. My CU accounts remained untouched as did my online access. The CU continued to automatically deduct my auto loan payments (however, when I originally called to inquire, I was told I had to submit them in person or via mail). I didn't experience a single adverse BK effect.

[Spagal]

I guess time will tell. In the meantime I am going to continue to do all my banking with CU B where my auto loan is and keep CU A account open with $5.00 in it until all of this is sorted out. I like CU A and would have kept using that account except for the fear of the unauthorized deductions that I have read about.

Hakuna Matata- Did you have to reaffirm or do anything special with your CU to keep your auto loan?

I am still a bit out from filing, aiming for April. So I haven't gotten to get a lot of details from the atty since I still gathering all my documentation and getting my affairs in order.

[HakunaMatata]

I chose to reaffirm my auto loan since my payment is very reasonable and I'm nearly break-even. I'm not sure if I had to reaffirm. I suspect the answer would be yes. I didn't have to do anything special throughout the entire process; and, I came through unscathed. Of course, I was fearful and took some precautionary action. I stopped my Direct Deposit and cashed checks as needed. The automatic auto loan deductions were a bit baffling. From my understanding, the CU should have ceased this process. Oh well, it worked in my favor (except when I followed the CU rep's false advice and submitted payment in person only to discover my auto payment was deducted a few days later -double payments and bankrupt...now, that's a way to build equity)!

If you're dealing with small to mid-size local CUs, your attorney (unfortunately) may not have answers. My BIL had an unfavorable experience which his attorney didn't foresee. He was current on two auto loans and the CU refused reaffirmations (he had slightly negative equity...the CU's refusal was because he was discharging a credit card). In the midst of BK, he had to secure alternative transportation.

While I was successful riding the BK/CU wave, others haven't had such experiences. You're in a position where you don't have to gamble. It appears you have a strong plan in place.

[Spagal]

HM- Was your brother in laws CC with the CU? Is that why they refused?

Again, all my CC's are with the big boys (Citi, BOA, Chase, etc). Only the car loan is with the CU and never been late.

Oddly enough never been late on anything. Tomorrow will be my first late payment ever. Boy am I nervous!

[HakunaMatata]

Yep, his CC was with the CU. The CU initiated an unpredictable game of loss. The CC was discharged and they took back negative equity vehicles which were both current. Strange.

Good luck with the missed payments! I can relate to the nervousness as I hadn't missed payments prior to BK. My best advice is to miss them (unlike me, who wasted money paying creditors while planning to file BK!). Don't worry, the phone calls and fancy letters outlining the changes to your cards (reduced limits, increased rates) aids in eliminating the nervousness! It's actually a bit inspiring!

[Spagal]

Thank you HM!

This forum has been very helpful. Even though I know I am filing its reassuring to read others experiences and know that everything will be okay sooner or later

I am fretting about the calls, but I will be letting those "Unknowns & Private" go to voicemail until I get a case number and tell them to bug off.