If a credit union was shut down by the federal government and a new credit union took over their accounts, do I owe the new credit union money?

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If a credit union was shut down by the federal government and a new credit union took over their accounts, do I owe the new credit union money?

I had a line of credit with one credit union and they were shut down by the fed for fraudulent practices. They were then taken over by another credit union. This all occurred about four years ago. Now the new credit union is trying to collect on that line of credit do I owe them money?

Asked on March 7, 2011 under Bankruptcy Law, Colorado

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

Yes, you almost certainly do owe them the money. When one business takes over another, it typically takes over the obligations both to and from that business. In your case, it's the "to" that matters--when the second credit union took over the first, they almost certainly took over the book of loans and the accounts payable, which means that any money owed to the 1st credit union will be owed to the second. They can't hold you responsible for amounts accrued because of what one or another credit union did--e..g if there there was a two year period when you couldn't make loan payments because there was no one to pay it to, the interest should probably not have kept accruing for that time--but they can otherwise hold to the amounts you legitimately owe.


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