Compliance Question of the Week

February 19, 2013

What can we do if a member has declared bankruptcy and only wants to reaffirm on one, but not all, of the loans he or she has with the credit union?

Reaffirmation is completely voluntary for both the member and the credit union. While the member does not have to reaffirm, the credit union can refuse to accept a reaffirmation that it does not like.

If, for example, a member wants to reaffirm on a car loan so that she can keep her car, but the credit union wants her to reaffirm on both the car loan and the Visa, the credit union can reject the member’s offer to reaffirm on only the car loan.

This is risky, because the member might decide to reject this offer, and then the credit union will not have any reaffirmation. Of course, if the member does not reaffirm, the credit union can repossess the car. Using this tactic is a business decision on the credit union’s part.

Related Links

Chapter 7 Discharge

Questions? Contact the Compliance Hotline: 1.800.546.4465, compliance@nwcua.org.

Posted in Around the NW, Community Impact, Compliance.