We presume you are having your WC checks paid to you by direct deposit into your Credit Union account and the same Credit Union helped themselves to some of your money to pay part of a loan they had given you before.
Once the check is deposited into your account, it merges with any other money in that account. It is no longer under the jurisdiction of the WCB and the Carrier's obligation to pay you has been satisfied by your deposit of the money.
Whether the Credit Union has the right to defray your outstanding past due loan by taking from your Credit Card savings or checking account depends on what it says in your Account Agreement and Loan Agreement with the Credit Union.
The foregoing is based on the little information provided; additional facts may change the comments given.
Without knowing more, it would be difficult to say. I presume that your Worker's Compensation checks are deposited into a specific account. It is possible that the credit union was enforcing a judgment or that you signed a waiver with respect to the loan. You will have to find out more information to know whether what is occurring is legal or not. It is very common for judgments to be enforced, such as child support against the account, even if it is for a worker's compensation case. Good luck.
If you are doing direct deposit and the credit union is taking the money after it hits your acct, you may want to switch your direct deposit to another bank until you get back on your feet.
If this information has been helpful, please indicate by providing feedback that the answer was either "helpful" or "best answer" as appropriate. Legal Disclaimer: Mr. Connell is a Colorado attorney licensed in only that state. The response herein is not legal advice and does not create an attorney/client relationship. The response is in the form of legal education and is intended to provide general information about the matter within the question.