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Credit Unions Treat Personal Bankruptcy Differently From Banks

Posted on April 23rd, 2014

There’s a difference between how banks and credit unions each handle patrons in a financial crisis. While banks may allow customers who have included bank debts in a personal bankruptcy to continue to patronize them, credit unions don’t allow the same. When a debt owed to a credit union is discharged in a  bankruptcy, the customer is barred from doing any business with them ever again. This means that individuals who want to remain with their credit union may have to get creative in how they restructure their debt.

One way to do this is simply to not include a credit union’s mortgage or credit card debt in a bankruptcy. This isn’t possible in every case, but if it can be done, the credit union will allow banking business to continue. They may notate a customer’s account, but this won’t affect the debts held from that institution.

Experts remind credit union patrons that, should a debt from any one branch of the credit union be included in a bankruptcy, there typically will be no additional business allowed with any other branches in addition to the branch in question. These experts recognize that credit union membership often means more personal relationships with one’s banking professionals than is usually the case in traditional banks. They advise, however, that this may not be worth leaving a credit card, mortgage or other debt out of a bankruptcy proceeding.

In a struggling economy, medical expenses, credit card debt and other bills may mean that filing for bankruptcy is the right move. A lawyer experienced in personal bankruptcy cases may be able to help individuals file for Chapter 7 or Chapter 13 bankruptcy and begin anew in the financial world.

 

Source: Fox Business, “Will Credit Union Still Want you Post-Bankruptcy?“, Justin Harelik, August 07, 2013

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