Bankruptcy Court Affirms MemberExpulsion

PORTLAND, Me. - (05/31/05) -- In an important case for creditunions, a U.S. Bankruptcy Court ruled last week that a credit unionmay expell members who cause the credit union loss during abankruptcy. In its ruling, the U.S. Bankruptcy Court for theDistrict of Maine stated that Bowdoinham FCU was within its legalrights when it revoked member privileges for two members who causedit a loss on a secured car loan. A Chapter 13 Bankruptcy Trusteehad challenged the credit union's policy revoking member privilegesfor anyone who caused the credit union a loss of more than $25. Thepolicy was adopted two weeks after the members filed forbankruptcy, owing the credit union $17,800 on a secured car loanand proposed a repayment of part of the loan. The new policy,similar to one held by thousands of credit unions.