Navy Federal Credit Union (NFCU) After Including in Bankruptcy - Data Point

[Anonymous]

So we are just starting the process of Bankruptcy. Retained an attorney a couple of weeks ago. We have been working on the "homework". We have NFCU and have been members for 30 years. Unfortunately, NFCU is where we have most of our unsecure debt so they are getting "burned" as its called. SO I can I expect to have our checking and savings accounts closed by them? We already opened new credit union accounts at PenFed because we expect that NFCU will close them. Our kids (older 26, 23 adn 18) all have NFCU accounts which was convenient to transfer to them when needed so that will no longer be an option. 

[Tazman81]

@RollTide81

Welcome to the forums.  Sorry to hear about the financial troubles, but things will get better.  Bankruptcy is a difficult and emotional journey.  Please feel free to ask any questions you have and we are happy to help out.

A few things that you need to do.

1. Make sure your name is NOT on any of your kids accounts.  I know sometimes when parents first get accounts for their kids, it's a joint account.  NFCU can use any account with your name on it (except retirement and mortgage property) as collateral for unsecured/auto loan debt.
2. Temporarily move any deposits you have to another institution as your accounts will be frozen once they receive the notice of bankruptcy.  The good news is that after discharge, you can go back to using your deposit accounts just like normal.

[Anonymous]

Thank you so much. Yes we did take care of that with NFCU. Thank you so much!! I had NO idea they would let you go back to them even for checking and savings. 

[Tazman81]

Yes, they sure will.  So you can keep your deposit accounts open, just move all of your money from them temporarily.  After the discharge, then you can move your funds back to NFCU including direct deposits.  This will allow you to continue to take advantage of the good savings rates that NFCU offers it's members, even though you will no longer be able to get any credit products with them.

There are 2 other changes that you may notice.

1. There will likely be a flag put on your mobile application indicating that you being able to view your accounts on the mobile is not for purposes of collecting a debt.  I've tried to have them take this flag off of my account (as my discharge has been almost 10 years ago), but they will not.  The good news is that flag does not impact the use of the app at all.  Its just a minor annoyance.
2. You likely will not be able to have the system open new deposit accounts for you instantly online.  Typically it will go into a queue for someone to manually open the deposit account for you.  So, it's basically just another minor annoyance b/c typically most of NFCU's deposit accounts can be opened instantly online, but for someone that has burned NFCU, the online request to open a deposit account goes into a queue and the account is normally opened within about 2 days.

Other than the above, no other issues with NFCU and I've even had every type of deposit account open with them know from money market, checking, savings, IRA MM, and CDs including their promotional rate CDs.

[Anonymous]

Thank you so much for the information!!!

[Hershey_Kiss]

I have 2 NFCU accounts (checking and savings) and recently filed CH7 BK. Neither of my accounts were frozen after being notified of BK filing.

[toi34]

Did you have monies in these accounts? And if so, were the funds cross-collateralized?

[Hershey_Kiss]

Yes i have a portion of my payroll DD into the accounts and nothing has been frozen or used to pay debts they are being burned on

[AlmostCreditGenius]

Sorry to bump this old thread, but I think my experience with NFCU is pertinent to the conversation... (a little background first)

I filed bankruptcy in June 2016, albeit a chapter 13.  I had a balance of about $10,000 on a NFCU visa credit card and $14,000 on a car loan with Navy Federal.  Both were listed in the bankruptcy.  

Because I earn a decent wage, I was required to pay back all of my debts at 100% over 5 years ($125,000 total debt which put my payment at $1916/month).  I paid them back in just 2 years with my last payment made in August 2018.  I just received my discharge on September 5th.

While I was still in bankruptcy, I was approved for a $600,000 mortgage loan through a different lender using my VA loan(June 2018) and I am now looking to refinance through NFCU.  Since my discharge, I have applied for a new visa credit card through NFCU, and a car loan for a $100,000 Tesla X, and a refinance of my primary residence, which I owe $560,000.  I was denied for every credit application with "Navy Federal suffered a loss" listed as the reason.  I asked what loss they incurred and paid it outright.  Then I re-applied.  I was denied the Tesla due to "too many inqueries" in my recent credit report.  I was granted the credit card, but I had to argue with the NFCU credit card department because they insisted that they had suffered a loss.  Of course, I paid them and upon further investigation they reversed their decision and granted me the card.  Next, the refinance... Initially, I was immediately denied for the same reason "Navy Federal suffered a loss" but I called and spoke with a representative who was able to push the application through notating that NFCU has NOT suffered a loss.  I will update later if I am successful in refinance through NFCU.

As far as my accounts being frozen, or my wife's or kid's... the answer is no.  My wife was not named in the bankruptcy.  She has a $40,000 car financed through NFCU and an $8000 credit card.  She has never had a problem.  I expect that I will always need to ask for a second level review of my applications with NFCU going forward as they have my account tagged with an alert which states, "NFCU has suffered a loss", despite the fact that I have paid the in FULL!

[Tazman81]

Thank you, this is a good data point. You are correct, the "NFCU has suffered a loss" is basically the bankruptcy flag on your account. You need to call in and speak with the bankruptcy department. They should be able to research your account, see that you are discharged and NFCU has been 100% paid back. With that, they should be able to remove the flag from your account which causes it to keep getting kicked out. While I was not able to go through this step (as I was not able to pay NFCU back in full), this should allow you to put applications in without the required second level review. Congrats on your success with getting everything paid back. Very glad it worked out with you being able to get credit with NFCU again.