10 June 2025
/ Cameron Deane
Credit Union Legal Trends: Cross Collateralization, Setoffs & Bankruptcy at CrossState 2025
Once again, Weltman’s #WhatsOnTap team attended the annual CrossState Credit Union’s Connect Convention – Attorney and Philadelphia Office Managing Attorney Cameron Deane is now sharing his top takeaways from this lively event!
Attorney Scott Best and I of the Philadelphia office, along with Attorney Matt Pomy of the Pittsburgh office, met with credit unions from across Pennsylvania and New Jersey to discuss industry updates and learn more about what services our credit union clients are in need of. This year’s conference was held at the Wind Creek Bethlehem Casino & Hotel in Bethlehem, Pennsylvania -- a new location for the conference.
A persistent theme during the conference was the changing landscape of the credit union industry. Credit unions are facing both technological advancements and regulatory changes to the industry, to which credit unions must adapt to in order to best serve their members. Despite these high-level concerns that impact the long-term business strategies of several credit unions we spoke with, it was also clear that credit unions are not immune from the increasing consumer debt defaults facing many lenders in recent months. As default rates continue to rise, credit unions must still grapple with the day-to-day enforcement and collection processes like any other lender.
Scott and I also had the opportunity to present during one of the conferences breakout sessions. During this session, we revisited a prior What’s on Tap episode – Cross Collateralization, Setoffs, and the Impact of Bankruptcy, which covers issues that are more common than ever in the lending industry. Similar to our regular What’s on Tap webinars, the session included questions from the audience and we were able to cover a variety of topics related to enforcement of lending contracts both in state court and in bankruptcy court, as well as answer questions that credit unions are facing on a daily basis.
We covered cross-collateralization contracts and the common issues we see from our credit union clients. Often times, during contract formation, it can be easy to leave certain fields blank or to believe certain loans are covered under a master agreement with the credit union, which can lead to issues later one when the credit union needs to pursue legal action to enforce the contract. Scott discussed this in detail to ensure credit unions have the necessary information to adequately enter into these contracts so they are legally enforceable should the credit union have to pursue that action.
Next, Scott covered exercising the right of setoffs, in which he gave insight into the enforcement mechanism that a credit union can pursue to recover on loans with members who have share deposits at the credit union. He also touched on some of the common exemptions that apply to the right to setoff, such as social security income, martial accounts, and retirement and other pension deposits.
Lastly, I provided the audience with an overview of the consumer bankruptcy process and how it impacts both cross-collateralization and setoff rights. First, I covered the automatic stay and its far-reaching impact on the communication and collection rights of a credit union against its members. Next, we discussed obtaining relief from the automatic stay to pursue enforcement, often when there is collateral to be recovered from a member. In addition, we also touched on reaffirmation agreements (and whether these can be done for cross-collateralized accounts) as well as recovery from a chapter 13 plan repayment.
We had a great time catching up with many clients while at the conference and were happy to provide some valuable insight to attendees. We look forward to attending next year when CrossStates returns to Atlantic City, New Jersey!
Attorney Scott Best and I of the Philadelphia office, along with Attorney Matt Pomy of the Pittsburgh office, met with credit unions from across Pennsylvania and New Jersey to discuss industry updates and learn more about what services our credit union clients are in need of. This year’s conference was held at the Wind Creek Bethlehem Casino & Hotel in Bethlehem, Pennsylvania -- a new location for the conference.
A persistent theme during the conference was the changing landscape of the credit union industry. Credit unions are facing both technological advancements and regulatory changes to the industry, to which credit unions must adapt to in order to best serve their members. Despite these high-level concerns that impact the long-term business strategies of several credit unions we spoke with, it was also clear that credit unions are not immune from the increasing consumer debt defaults facing many lenders in recent months. As default rates continue to rise, credit unions must still grapple with the day-to-day enforcement and collection processes like any other lender.
Scott and I also had the opportunity to present during one of the conferences breakout sessions. During this session, we revisited a prior What’s on Tap episode – Cross Collateralization, Setoffs, and the Impact of Bankruptcy, which covers issues that are more common than ever in the lending industry. Similar to our regular What’s on Tap webinars, the session included questions from the audience and we were able to cover a variety of topics related to enforcement of lending contracts both in state court and in bankruptcy court, as well as answer questions that credit unions are facing on a daily basis.
We covered cross-collateralization contracts and the common issues we see from our credit union clients. Often times, during contract formation, it can be easy to leave certain fields blank or to believe certain loans are covered under a master agreement with the credit union, which can lead to issues later one when the credit union needs to pursue legal action to enforce the contract. Scott discussed this in detail to ensure credit unions have the necessary information to adequately enter into these contracts so they are legally enforceable should the credit union have to pursue that action.
Next, Scott covered exercising the right of setoffs, in which he gave insight into the enforcement mechanism that a credit union can pursue to recover on loans with members who have share deposits at the credit union. He also touched on some of the common exemptions that apply to the right to setoff, such as social security income, martial accounts, and retirement and other pension deposits.
Lastly, I provided the audience with an overview of the consumer bankruptcy process and how it impacts both cross-collateralization and setoff rights. First, I covered the automatic stay and its far-reaching impact on the communication and collection rights of a credit union against its members. Next, we discussed obtaining relief from the automatic stay to pursue enforcement, often when there is collateral to be recovered from a member. In addition, we also touched on reaffirmation agreements (and whether these can be done for cross-collateralized accounts) as well as recovery from a chapter 13 plan repayment.
We had a great time catching up with many clients while at the conference and were happy to provide some valuable insight to attendees. We look forward to attending next year when CrossStates returns to Atlantic City, New Jersey!
If you have any questions about this topic, are curious to learn more about our team’s presentation, or have an inquiry about Weltman’s bankruptcy recovery, consumer collections and/or credit union representation solutions, please connect with Cameron at any time.
This blog is not a solicitation for business and it is not intended to constitute legal advice on specific matters, create an attorney-client relationship or be legally binding in any way.
This blog is not a solicitation for business and it is not intended to constitute legal advice on specific matters, create an attorney-client relationship or be legally binding in any way.
