Interesting maneuver by my credit union

[nceguyfromne]

I have 2 reaffirmed auto loans and a discharged Visa card (with just a couple hundred left to pay) with a local credit union. I have been paying down the Visa since it was such a small balance and it made sense to try to keep a good relationship with them.

Recently, though, funds were a little tight so I gave into temptation and decided to let the Visa run late, figuring they weren't going to (and couldn't) bug me about it. Today, however, I received an e-mail from one of their collections officers asking me to please call in regards to my account. My auto loans are paid up so I was pretty sure this was in regard to the Visa, but I decided to call anyway just in case.

Sure enough, it was in reference to the Visa. She was very nice but just "wondering when (I'd) be sending (my) payment." I decided to be indirect and say, "Would you be able to send me some kind of statement for this? I no longer receive anything since it was discharged in bankruptcy" (emphasis on "discharged in bankruptcy"). So she puts me on hold and comes back. "You appear to be receiving monthly e-mail notifications," to which I replied, "Actually, no. Those stopped after I filed my bankruptcy." I thought by now she'd get the point but nope, not at all. She recommended that I call the customer service 800-number to ask about the e-mail notification and closed with once more asking me when I'd be able to make a payment, so I just left it vague and said "soon."

So I find this whole thing interesting. It would appear that they lured me into calling so they could discuss this. When my auto loans are late, I get both the standard "please call us" e-mail and a phone call. This time, only an e-mail. Can I assume that if I am contacting them this provides them a little loophole to try to collect on the discharged account without violating bankruptcy law, especially where they have other legitimate business with me?

At any rate, I'll know not to call them again if I am late on this account and know my auto loans are paid.

[kornellred]

Why in heaven's name would you be paying a discharged debt??? You don't owe it.

[discombob1]

Why in heaven's name would you be paying a discharged debt??? You don't owe it.

I was wondering the exact same thing. They will probably get away with as much as you allow. By paying on a discharged debt, you encourage them to push the limits.

[Pandora]

Add me to the mix of "HUH?" you're throwing your money away - regardless if its "only a few hundred" or not - it was discharged. It's not like you can use the card...

[nceguyfromne]

Add me to the mix of "HUH?" you're throwing your money away - regardless if its "only a few hundred" or not - it was discharged. It's not like you can use the card...

Well I suppose the real question is, do I have any chance of doing business with this credit union in the future, regardless of whether I pay off both the reaffirmed auto loans and the discharged Visa, or is it likely they wouldn't lend to me again anyway? I am only paying it because my lawyer said it might be beneficial to me to keep a good relationship with at least one of my creditors. We're literally talking about $200 here. But if it poses no benefit to me then I have no need or desire to give them a dime. I reaffirmed the auto loans because 1) we needed them anyway and 2) they were almost paid off, with the added incentive that I will soon have 2 paid-in-full loans showing on my credit. By that same token, I am paying the Visa with hopes there's something in it for me. Trust me, I have no emotional attachment to any of the debt I unloaded.

[frogger]

Why in heaven's name would you be paying a discharged debt??? You don't owe it.

I'm going to be one to disagree with most of you here on this. I paid some of my debt that was discharged, because it was the thing that I wanted/needed to do.

What I paid was after discharge, and was done in order to maintain a working relationship with some of my creditors.

I did not pay any credit cards, but I did pay my local small business people.

[nceguyfromne]

Thanks for your thoughts, frogger. I see this as a calculated risk. I have a long-standing relationship with this local credit union and paying off this tiny, albeit discharged loan along with my reaffirmed auto loans keeps that relationship intact. Whether or not it benefits me in the future in terms of being able to get another loan through them is anyone's guess, but my lawyer seemed to think, and I agreed, it was a small enough risk worth taking. Would I do the same for Capital One or AMEX? Not a chance.

It's $20/month for a few more months - less than 4% of what I'm already paying them for the cars. When I was drowning in debt I was probably paying that much per day in interest alone.

[justbroke]

A risk, but one that you can take. I'm paying my doctor on a discharged debt to keep the relationship. He's an awesome doctor and well respected. Somethings are worth paying for.

However, the bank should be politely reminded that the debt was discharged and that they shouldn't attempt to collect the debt. LOL

[olivies]

I wonder, if you pay off the debt despite it being discharged, how can or will they report it to credit bureaus?

[nceguyfromne]

I wonder, if you pay off the debt despite it being discharged, how can or will they report it to credit bureaus?

As far as I know, they won't. That doesn't matter to me, though. I was only paying it with the hopes it might increase my chances of borrowing from this credit union again in the future. I have a pile of other discharged debts that will never be paid; this one tiny debt shouldn't change much.

[discombob1]

I'm curious to see how it works out for you. I do understand your reasoning. Obviously the downside is that you have to have the awkward "you can't collect" conversation with them. But maybe in the long run it will repair that relationship. I'll be curious to hear how it does work out for you.

[Pandora]

Well I suppose the real question is, do I have any chance of doing business with this credit union in the future, regardless of whether I pay off both the reaffirmed auto loans and the discharged Visa, or is it likely they wouldn't lend to me again anyway? I am only paying it because my lawyer said it might be beneficial to me to keep a good relationship with at least one of my creditors. We're literally talking about $200 here. But if it poses no benefit to me then I have no need or desire to give them a dime. I reaffirmed the auto loans because 1) we needed them anyway and 2) they were almost paid off, with the added incentive that I will soon have 2 paid-in-full loans showing on my credit. By that same token, I am paying the Visa with hopes there's something in it for me. Trust me, I have no emotional attachment to any of the debt I unloaded.

While I understand the reasoning of re-paying some discharged debts (doctors / business) in general, CU's will automatically close the account down regardless if you pay it back or not, included in your BK filing or outside of it, doesnt matter. Our CU, of which we were members for over 20 years and got 95% of all loans through - closed the account immediately once we filed BK due to our stripping the 2nd, which they held. We do have a car through them and its outside of our plan - we continue to pay it, however due to having included the 2nd in our filing, they immediately locked the account & sent us a letter stating as soon as the car was paid in full - no further business would be allowed.

You should look at your CU clauses - it will tell you if they will allow you to remain a member and/or use their services once filing BK on a debt with them. Usually it states something to the affect of "if actions by you bring a loss to CU members..."

[nceguyfromne]

Thanks Pandora, I will definitely look into that. If they would not do business with me in the future then that's $200 I can save. The Visa account is (obviously) closed. It had actually been closed a few months prior to my BK after I requested a temporary forbearance on the auto loans (the BK filing obviously would have had the same effect, though), but my checking and savings accounts with them do remain active. In the interest of being over-cautious I do not deposit any funds into those accounts anymore but earlier this year they did deposit a dividend and I was able to withdraw it. If the CU clauses don't clarify anything maybe I will just call and ask.

[screentest]

I reaffirmed two auto loans and BK'd a 12K signature loan from my credit union. To quote the lady in the credit union's BK department. "We will NEVER do business with you again." Hmmmmmm.... just checked to be sure, my heart still not breaking.

ST

[nceguyfromne]

I love this lady. She called and e-mailed again today; waited until my auto loans were a day late so she could cover her behind. I didn't answer. I think I'm going to stop paying it just to prove a point. It's only $200 but it's a discharged $200 that I don't have to pay. We have already resolved to pay cash for any automobiles obtained in the foreseeable future (including the one we just bought a few weeks ago) and not re-enslave ourselves to auto loans, but even if we changed our mind and decided on a loan, we'd get it elsewhere.

I'll just be careful to stay current on my auto loans. A few more months and these will be paid off and we will no longer be slaves to our automobiles!