Can my Credit Union freeze our account?

[Nanzee]

Hi, I have been doing some reading here, and am getting very concerned that my credit union might freeze our accounts. If they do, how am I going to make my first payment to the court which is due on 12/7? We officially filed last Friday, and I thought the worst was behind me, but now, what do I do? I am really starting to freak out. We live in New York, and I bank with Nassau Educators Federal Credit Union. We have a car loan with them which we are to continue to pay (are current), and a line of credit which is going into the plan (also current). Can they do this? Are they allowed? Our petition was filed this past Monday, and I all ready received documentation from the court. Thank you so much for your help.

[tjs1970]

i would say get the money out of there right away........especially since the one loan is going in the plan...........

[Nanzee]

But I was told that Chapter 13 protects us from our accounts being frozen?? Our paychecks go into this account!! Honestly, is this happens, I will have a heart-attack - I just cannot take anymore stress.

[AngelinaCat]

Call your CU tomorrow morning and talk to their BK department. It may be that the 13 does indeed keep your accounts from being frozen or closed. If you filed a week ago, it seems that if the CU was going to close your accounts, they would have already done so.

We have our accounts with a CU in Dayton, Ohio. We live in Florida. My dh ('Hub) signed up with them more than 40 years ago when he first joined his company, and he wished to keep doing buisness with them.

We filed a Ch7, and though we were current on the car loan, they did freeze the accounts and make noises about our BK filing being a "violation of the trust that fellow members have in their peers as being members of this CU". We reaffirmed the car loan, and an overdraft protection loan that we had with them, and after talking with the BK department, came to a good understanding. They even reversed the NSF charges against us for the ten days or so, that the accounts were frozen. Everything worked out well, and they were very nice. We are still members of the CU.

Good luck to you, and welcome to the forum.

[rrockinggramma]

as AC recommended talk to them but I would definitely be removing my money and changing my direct deposits elsewhere. What they do is they "cross collaterialize" which means if you don't pay them 100 percent on the unsecured stuff, they will add it to your car loan and seize everything. I am amazed your attorney didn't give you a heads up on cu policies before filing.

[MSbklawyer]

As with so many things in bankruptcy, there is a technical answer and a practical answer: Technically, the bankruptcy stay prohibits them from freezing your accounts. Practically, however, sometimes things fall through the cracks and accounts will get frozen anyway. It rarely happens, but sometimes, it does happen. If it does happen, it will require your attorney to get in touch with them and put them on notice of the stay and then they will un-freeze the accounts. That process may take a few days.

It may be better to start a new account at an unaffected bank. But then, sometimes people who have filed bk have trouble getting banks to open accounts with them. Talk to your attorney.

[ccfriend]

Here is what happened to me: my husband and I had a joint checking and savings account at our CU. I filed ch 13 on my own. We had a auto loan from our cu in both of our names and I had a VISA just in my name. The auto was paid outside the plan and the VISA was included in the plan. I filed in June of 08 and at the end of August of 08 I went to a store to buy my kids school clothes and my debit card did not work.
I called my CU and they said because I defaulted on my VISA I lost my privaledge to use the other services. My account was frozen. They said I could come in and take the money out but my debit card and checks were no longer good. I was allowed to keep my kids' accounts open and my savings account was left open but only was allowed to have $5 in it. I have to send a check each month to pay the auto loan.

[Nanzee]

Thank you all for your responses. I took out my paperwork that I received from my attorney. The line of credit is not on the list of unsecured creditors. I have no idea why. My car loan - which has a balance of 3600.00 - is listed as a secured creditor. I most definitely advised my attorney about the line of credit. I am not sure what this means - could my attorney have made a mistake? Or am I just going to keep paying the line of credit?

[lrprn]

I took out my paperwork that I received from my attorney. The line of credit is not on the list of unsecured creditors.

It would have been best to catch this omission before filing, but that can't be undone so let's move on.

My car loan - which has a balance of 3600.00 - is listed as a secured creditor. I most definitely advised my attorney about the line of credit. I am not sure what this means - could my attorney have made a mistake? Or am I just going to keep paying the line of credit?

Yes, it's possible your attorney made a mistake - they are human too.

Have you brought this to your attorney's attention yet? If not, you need to do so immediately. It's not too late to file an amended petition that includes your HELOC.

Whether you need to make this payment yourself directly or not depends on how your plan is set up. But regardless, you need to have the HELOC added to your plan as a creditor. *ALL* debts must be listed on your filing papers.