The Myth of Bank Loyalty

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On a fairly regular basis I have people that come into my office who desperately need to file bankruptcy but hesitate in doing so because of their concern over damaging what they view as a strong relationship with their bank.  They often say “I can’t do this to my bank, we have had such a great relationship.  I have had a credit card with them since I was 18 years old!”.

It is understandable that people believe they have a “close” relationship with their bank.  This is what banks and other lenders spend a lot of advertising dollars on – making it appear that they are like family and there for you in your time of need.

You can test the strength of your relationship with your bank by applying for credit when times are not so good for your pocket book.  You may have loaned money on ten different car loans in the past and paid them all back on time and complied with every term of the loan.  It won’t mean a thing to that bank if you show up with less than stellar credit.

It is at that point you will come to the harsh realization that your “relationship” with the bank is purely business and if you can’t provide a benefit to the bank or appear even in the slightest to be a credit risk, the bank will turn its back on you.

Why is this important?  Because too often people choose not to file the bankruptcy case that would get them back on to road to financial recovery due to this perceived relationship they have with a particular lender.  No one wants to file for bankruptcy.  But sometimes it is completely necessary and there can be no true recovery with out it.

When times are good your bank or credit union will be your best friend.  When times are bad they can be your worst enemy.  It is what it is.  Not good, not bad.  But you need to understand the true nature of this relationship when making financial decisions that will significantly impact your life.

Nothing personal.  Just business.