Can I keep my credit union account if I file for bankruptcy?
If you file for bankruptcy, you might lose your credit union account. Learn more.
If you file bankruptcy and have a checking or savings account with a credit union, whether you can keep that account will depend on whether you owe money to the credit union and, if you do, whether you intend to pay it back.
Credit Unions As Membership Organizations
Credit unions are membership organizations. As such, they provide certain benefits that regular banks cannot, such as better interest rates, lower fees, larger lines of credit and more creative financing. They frequently provide more personalized service than a national bank and may provide loans and accounts to those a bank might turn away. However, part of being in that membership organization means that if you cause a loss to the credit union, you risk harm to the other members, and the credit union will terminate your relationship.
Bankruptcy and Your Credit Union Account
If you file bankruptcy and hold a credit union account, but you don't owe the credit union money, the credit union will likely allow you to keep your account. Your specific credit union's policy may state otherwise, but generally, if you don't cause the credit union a loss, the credit union will not close your account.
When you file bankruptcy and you owe the credit union money, the credit union incurs a loss if you discharge that debt. (Learn what it means to discharge a debt in bankruptcy.) For example, if you have a car loan and a credit card with your credit union and you decide to give the car up and get rid of the credit card, the credit union will consider that a loss. That loss harms other members in the organization, and the credit union will terminate your membership benefits and close your bank account.
If you agree to pay back all the money you owe the credit union despite your bankruptcy, the credit union may allow you to keep your account, because it will not suffer a loss if you maintain the terms of your original loan agreements. So if you have a car loan and a credit card with the credit union and sign agreements that you will repay the loan and the credit card, the credit union will let you keep your checking and savings accounts.