Military Centric Credit Unions to Merge
The San Diego U-T recently reported http://www.signonsandiego.com/news/2010/sep/13/two-credit-unions-to-merge/ that two major credit unions will be merging.. Navy Federal Credit Union is a well known major provider of consumer loans. And, as suggested by its title, a significant number of its members are in the Navy or other branches of the military.
NavyFed, as it is commonly known, will be taking over another well known credit union, USA Federal Credit Union, which entity has 5 branches in San Diego county. According to the U-T report, authored by Mike Freeman, the transaction is scheduled to be complete by Oct. 1, 2010. USAFCU is also based primarily upon military membership, as evidenced by it’s 11 branches on military bases in Japan and South Korea.
The reason for the merger is apparently the continuing reduction in capital and the increase in non performing or delinquent loans held by USAFCU. The story is significant, particularly for San Diego consumers and Bankruptcy practitioners, but also for the country as a whole.
First, military pay, while perhaps lower than average for like and similar service, is virtually guaranteed, and therefore, loans to military families have been very popular and successful. However, in a sign of the continuing financial morrass, even those in the military are struggling with their mortgage payments, their vehicle payments, and their credit card obligations, while the banks and other financial institutions extract every last available dollar without regard for any financial recovery, other than their own.
Second, all consumers should know, and this includes those in the military, that debts owing to a credit union can be included in a Ch. 7 or a Ch. 13 bankruptcy filing. Many times our clients will suggest that the want to ‘keep’ the debt owing to the credit union. This is understandable. Credit Unions, by and large, are more lenient in terms of working with their members to maintain some sense of financial control. Still, all debts must be listed in a bankruptcy petition, even those debts one might favor, such as to your credit union.
Perhaps this announced takeover of USAFCU by NavyFed will result in a better stronger financial institution, and we all certainly hope so. In the meantime, consumers, bankruptcy filers, and attorneys alike, will now have a bigger NavyFed to deal with in any contemplated bankruptcy filing.
John C. Colwell, Attorney at Law
San Diego, CA
877-663-3287
Member, Board of Directors, NACBA
National Association of Consumer Bankruptcy Attorneys (NACBA)
