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Credit unions and bankruptcy

Florida residents often take advantage of the multiple services and benefits offered by banking with a credit union. However, if someone has an account with a credit union, especially if they have loans with the credit union, it can be tricky if that individual files for bankruptcy. While someone can often do business with a bank or creditor later down the road after filing for bankruptcy, this is often not an option with a credit union.

When someone files for bankruptcy, a credit union will almost never offer someone the option of banking with them again if they have a loan there. Individuals can keep doing business with the credit union, but they'll need to reaffirm their loans to do so. For example, if someone has a car loan with a credit union but wants to get rid of credit card debt from another lender, they can agree to be responsible for the car loan again after the bankruptcy. This will discharge their credit card debt and it will keep someone in good standing with the union, but they will still be obligated to pay off their car loan.

Another option is to walk away from the relationship with the credit union. If an individual chooses this option, they should stop putting money in the credit union because the union can use these funds to pay off a late loan held by the institution.

Filing for bankruptcy could enable a person to get out of debt and regain control of their finances, but it's not always a simple process. A lawyer may be able to help someone throughout the filing process, which could help them to get the most beneficial results possible out of their bankruptcy filing.

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

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