Costs of Bankruptcy Nationally, consumer bankruptcies have spiraled upward. In 2000, the number of consumer bankruptcy filings remained high with approximately 1.22 million filings. From 1997 to 2000, there was an average of 1.31 million personal bankruptcy filings a year. Credit union members have not been immune to the rising trend in personal bankruptcies. On average nearly half of all loan losses at federally insured credit unions in 2000 were due to bankruptcy.
Most credit unions have lower operating margins than other types of lenders.
Typically, credit unions pay higher rates on savings and charge lower rates on loans than other financial institutions. Because of these smaller margins, credit unions are more heavily impacted than other financial institutions by escalating bankruptcy costs. A natural reaction for some institutions is to increase interest rates, but that is not what credit unions do. Credit unions keep interest rates as low as possible for the benefit of their members. Credit unions also do much to promote financial responsibility among their members.