Financial Problems.

Dear Bankruptcy Adviser,

My checking business relationship, mortgage and credit card are with my credit union. My car loan is with their sister branch in another state. I am planning on filing for bankruptcy, but know my credit matrimony will close/freeze my account when I do so. Volition their sister branch nevertheless work with me, such as by letting me open up an business relationship with them? Thanks.

-Mary

Dear Mary,

Credit unions are afforded special treatment in defalcation, simply burning a credit union by eliminating their debt will end any current and hereafter association with them. Discharging a debt with a bank doesn't mean you never get to banking company with these institutions once more, but eliminating a credit union debt ends all current and future associations.

When a client comes to me with your situation, I explain these three scenarios you could also attempt.

Keep your mortgage and your credit carte du jour/personal loan. Clients who go along to pay on the mortgage and the credit card or personal loan tin can go on cyberbanking with the credit wedlock. Prior to filing, I have the client contact the credit union and inform them of the awaiting filing. The credit union will note the individual account, and the bankruptcy will not interrupt cyberbanking activities.

This pick volition crave you to reaffirm the credit card/personal loan balance and may require the same for the mortgage. Past doing this, you will exist legally forced to pay all or a portion of the debt that may otherwise take been subject to discharge in your bankruptcy case.

In layman's terms, the lender wants the right to sue yous for whatever unpaid balance in the event you do not pay on the loan later the defalcation, and the reaffirmation understanding gives them that right. Credit unions have a specific exemption in the bankruptcy code to let you to reaffirm a loan with them afterward filing bankruptcy.

Keep your mortgage, but eliminate your credit card/personal loan. You lot are allowed to keep paying the credit wedlock mortgage loan but eliminate the credit card in the bankruptcy. They tin can't prevent on your home every bit long as yous continue paying the mortgage, but y'all volition no longer be able to bank with the credit union anymore.

Prior to filing, you must stop putting coin into the credit union account. The credit marriage will not allow you shut the account completely if you lot owe them any money, but you don't desire to put any new funds into that business relationship either. They have the right to seize any funds in the account once you lot stop paying on the credit card/personal loan.

Walk abroad from your mortgage and your credit card/personal loan. If y'all cull to become this road, the solution is the same every bit the option above. Exercise not put any more money into your credit union account, as your relationship with them volition be over.

Every bit for your main question, I'll assume in your situation that using a sister branch means y'all applied for a car loan with the same credit union with a branch in another state. If you file defalcation, it will mean your banking relationship is over with all credit spousal relationship branches and divisions. Y'all tin can still proceed your vehicle fifty-fifty though your banking relationship with the credit unions would end.

In my stance, I do non believe the relationship with any credit union is worth reaffirming a credit card or personal loan. I know almost credit unions personalize banking, every bit you may know the bank manager and other employees by name. I approximate I have seen the nasty side of credit unions and do not believe that relationship is worth it. However, many clients practise reaffirm debts with credit unions and practise continue receiving time to come benefits. So information technology is non a crazy idea, just not one I would propose.

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