Although there are ramifications at your credit union if you file for bankruptcy, if you’re able to discharge your unsecured debts, like credit card debt and medical bills, the positives outweigh the negatives.
If you’re a credit union member and you file for bankruptcy, the credit union can deny your banking abilities by stopping ATM withdraws and electronic bill payment, and it could freeze and seize your money to recover losses. Credit unions can also close accounts until you repay all the money you owe them. Because of these issues, most bankruptcy attorneys will tell you that you should withdraw all money in your accounts before you tell your credit union you’re filing for bankruptcy or you actually file a bankruptcy petition.
While all of this may seem negative, the positives of bankruptcy outweigh these issues. Chapter 7 and Chapter 13 bankruptcy result in the discharge of unsecured debt, which can lead to the end of many headaches associated with them. Collections will end, as credit card debt and medical bills are discharged during the bankruptcy process. Collections include foreclosure and repossession. Also, most lawsuits end after bankruptcy filings because of automatic stays that prevent debt collectors from coming after you. Finally, under Chapter 13 bankruptcy, you can reorganize your debt and make payments toward your home while putting a delay or stop to foreclosure.
Credit unions function as a large group partnership. That is why savings accounts are referred to often as ‘shares’. Under this approach, members who force them to take financial losses are considered harmful, which means if you’re a member and you file for bankruptcy, there will be consequences from the credit union. However, remember that you can always open accounts at other banking institutions if you’re thinking about filing for bankruptcy.
If you feel like you are in a financial hole and are being harassed by creditors, contact our office now for a free consultation. We can offer you the best solution for whatever your debt issues may be.
Law Firm of Kevin D. Judd Washington DC bankruptcy attorney