Sued by STCU? What Spokane-Area Members Need to Know

Why a credit union lawsuit is different

STCU is a member-owned credit union based in the Spokane area. Three things set a credit union apart from a bank or a debt buyer:

• Cross-collateral clauses. Credit union loan documents often say that your car secures every debt you owe the credit union, including a credit card or signature loan. Paying off the car may not release the title.
• Setoff. If your paycheck is deposited at the credit union you owe, it may be able to take money from your account to cover a past-due loan.
• Membership. A credit union can restrict services to a member who causes it a loss, in or out of bankruptcy.

If you bank where you owe, talk to me before you do anything else. The order in which things happen matters.

My experience with STCU

I have dealt with STCU, and I have found that they are aggressive. If the debtor has “caused [STCU] a loss,” then they will basically close the debtor’s account. What constitutes a “loss” is interesting. Even a non-reaffirmed debt is viewed as a loss, and a HELOC that doesn’t get reaffirmed is a loss in their eyes.

Here’s the thing, though: if you refuse to reaffirm a HELOC while discharging STCU credit card debt, they will all-but threaten foreclosure.

If you have already been served

You generally have 20 days from service in Washington to respond in writing. Send your answer or notice of appearance to the attorney named on the summons. Papers with no case number still count, because Washington permits service before filing. My guide to responding to a lawsuit in Spokane County walks through it.

Miss the deadline and STCU can take a default judgment, then garnish wages or reach accounts held elsewhere.

Bankruptcy and STCU

The automatic stay stops the lawsuit, a garnishment and, in most situations, further setoff. An unsecured STCU card or signature loan is normally discharged in Chapter 7. A vehicle loan is handled separately: you can keep the car and keep paying, or surrender it and walk away from the balance. See seven debts Chapter 7 wipes out.

Call before you move money

Reach me at (509) 906-2221 or book a free consultation.