Credit Union Loans in bankruptcy

Many credit unions will make you close your checking and savings accounts if you discharge a loan or credit card debt from the same credit union. In such event, you will have to open new checking and savings accounts at a different financial institution. Additionally, your credit union loan may be secured by funds in your credit union accounts, and in such event, the credit union can seize money in these accounts to pay the loan prior to the filing of the bankruptcy petition. You should examine your loan documents or talk to your credit union if you are unsure whether or not your credit union loan is secured by money in the accounts. Many credit unions also “cross-collateralize” loans, which means that a credit card account may be secured by other property such as your automobiles.

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