Credit Unions and Bankruptcy

Credit Unions and Bankruptcy

Credit unions always ignores doing business with the people that involves in any kind of bankruptcy, but they're also cautious to avoid violations of bankruptcy law.

Automatic Stay

According to attorney Daniel Mc Garry, when a debtor files for bankruptcy, he has protection from actions by the creditor. Most of the credit unions write into to their member agreements that the bank has the right to make an unsecured debt, when they deals with a bankrupt credit-union member then they tries to avoid violating the "automatic stay" statute of U.S. bankruptcy code.

Significance

Generally credit unions support legislation because it costs taxpayers and credit unions money and they makes it tougher for people to declare bankruptcy.

Effects

According to McGarry, Credit union may deny extending further credit to a member who discharges debt during a bankruptcy but this doesn't mean a person who declares bankruptcy can't use the services of his/her credit union.

Tip

According to Bankruptcy Law Network, those considering filing for bankruptcy should take their money out of their credit union and putting it in another institution to prevent the credit union putting a freeze on their account to offset possible future losses. 

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