Beware of cross collateralization

[tkharvey]

I have just had the worst day of my life. My husband and I woke up this morning to find my daughter's car (in my name) reposessed! No, we weren't late on the payment, but we have defaulted on a Visa in the same credit union that holds our car payment. We are including the Visa in our 13 plan (not filed yet) and have stopped making payment on it. However, we have been current on the car. But because of "cross collateralization, they legally can come repo it. Those of you with similar situations, beware. How heartless can they be? My husband just called credit union last week with attorney info and told them of our financial hardship and upcoming bk. The customer service rep sounded so sincere on the phone telling us she's sorry to hear of our situation. A week later, they come in the middle of the night and take my daughters car, one that she works a part time job to afford the payment, while going to college full time. I just can't believe this is happening to me.

[BkinTX]

That's horrible. I'm really sorry.

I think this is hard to avoid because the big banks own everything now.

[Kkole425]

can they do that with your home? Country Wide and GMAC have our mortages and CW is now BOA we are bankrupting about 6 cards from them.

[Tbornetun]

The reason for the OPs cross collateralization is because they are with a credit union. This is very common with CUs, not so much with other national banks although it does still sometimes happen.

BOA does not want your home as long as you are making the payments. Rest easy.

[walkthaplank]

I have just had the worst day of my life. My husband and I woke up this morning to find my daughter's car (in my name) reposessed! No, we weren't late on the payment, but we have defaulted on a Visa in the same credit union that holds our car payment. We are including the Visa in our 13 plan (not filed yet) and have stopped making payment on it. However, we have been current on the car. But because of "cross collateralization, they legally can come repo it. Those of you with similar situations, beware. How heartless can they be? My husband just called credit union last week with attorney info and told them of our financial hardship and upcoming bk. The customer service rep sounded so sincere on the phone telling us she's sorry to hear of our situation. A week later, they come in the middle of the night and take my daughters car, one that she works a part time job to afford the payment, while going to college full time. I just can't believe this is happening to me.

Have you talked to an attorney about a possible emergency filing so you can get the car back?

[sassiebaz]

Yes, I agree! File an emergency BK. We got ours filed in one day. We too have a CU and had something happen when our tax refund was accidently deposited into the account, they sucked it all up to pay our past due amounts...it was heartbreaking! Good luck, you are NOT alone!

[tkharvey]

Thanks for the words of encouragement. We have been waiting to file for three months but can't yet as we are trying to to a loan mod with our lendor (right in the middle of it). Lawyer says if he files BK now, our modification would halt. If loan mod doesn't go through we'll have to surrender house, which we don't want to do. CU said they would give me clear title on the car if I pay it in full (5K) within the next ten days. We're trying to borrow the money from a relative as it is a clean, great, reliable car that my daughter needs to go to and from school and work. That's what I feel most terrible about. She works and goes to school and gives me the money for her payment (even though it's in my name). And now, the car is gone. Hubby and I feel like we have failed miserably as parents. We're hard working people just caught up in the mess of the economy (hubby is in real estate...new home sales. went from making 100K plus to under half that).

I think today I honestly hit "rock bottom" so to speak. It was a horrible day. Thanks for the replies

[dingdong]

I am sorry that has happened to you.

You have in no way failed at all as parents. It is just a very unfortunate symptom of the economic climate we are in. I am sure your daughter loves you just as much as she did before.the repo.

Is your daughter on the loan?

You may be able to buy the car back at auction at a much lower price than the balance of the loan. Impound lots and auction as filled with repo cars.

Can your daughter apply for a car loan in her name only and possibly offer to buy the car back from the CU?

IFshe makes a decent offer, and she is over 18, they may go for it.


Or possibly talk to the board at the CU and see if they will allow a reaffirmation of the loan or if she is not on the loan , possibly allow her as a cosigner so they can be assured that the car will not be BK'd on?

Don't give up hope yet, remember a human makes these decisions, and if you can logically appeal to their rational and human side. (through a reaffirmation and possibly a plea by your daughter to continue timely payments, pointing out the CU is just going to lose money in interest and payments and loss of value due to deppreciation if it is sold at auction) maybe they will allow her to keep it.

Be persistant until you get the answer you want. Even if you have to go to the president of the bank. Look on their website and find out who is the top decision maker at the CU and rationally appeal to that person. You never know?

Good luck!

DD

[banca rotta]

Sorry this happened to you. Not to play devil's advocate but CU's don't seem to like us very much. Unlike the large banks with shareholders and political connections to TARP funds, CU's are owned by the memberes such as yourself and they can't afford any defaults since they really have no profit margins.

If you have no reason to wait then file an emergency petition and hopefully you will get the car back.

Good luck!

[tkharvey]

Actually, the only way to get the car back is to pay balance in full (which is fine, because we just put nearly 1K in it for repairs, runs great, etc.) Unfortunately, we don't have the 5K and have asked relatives to help...something we've never had to do and it's so humiliating. I'm concerned though that because the Visa will still be in default, they're gonna screw me over and not send in the title once I pay the car off in full. My attorney says just to be on the safe side, get them to stipulate something in writing that the title will be "free and clear" once the loan is paid off. Just in case, I'm when we do get the car back later this week, she'll park it in the garage "just in case" until we get the title. What a nightmare this has become. Can't wait to file after our loan mod goes through (I'm hopeful) and to get back on track, moving one step closer to financial freedom. I've cried so much this weekend, my eyes are barely open they're so puffy. There's got to be something more out there for us all. I'm determined to find it and rid myself of the stress I've been under for so long.

[eddiep]

Well you sound like a great mom to me. You bought you daughter a car, kept current on the payments for her, figured out how to get her car back, and you are in taking the necessary steps to stabilize your financial future! Good job!

[tkharvey]

eddiep.....Thanks.....I needed that!

[tkharvey]

OK, so the credit union is saying that if I pay the car off in full (my father in law gave my daughter the money) then they would release a "free and clear title" to us. My attorney recommended that we get this in writing since they repo'd the car in the first place (on a loan that wasn't even past due) obviously exercising their right to "cross collateralize" since I have a very large Visa that I've defaulted on and including in my BK. However, the credit union is refusing to put it in writing and that I would "just have to take their word for it" that they will release me the title. What if they don't? Then my daughter will have no transportation. It's crazy, I have the money, I want my car back, but I'm scared. What should I do????? I'd go buy a totally different car and pay cash but we've put so much money in this car the past month, i.e., new tires, brakes, ac....the works! Anyone hear of anyone keeping title on paid vehicle to use as collateral on other defaulted loans within the same credit union. Any advice would be appreciated. I'm stressed to the max and it's taking a toll on me and my family.

[eddiep]

Have you asked your lawyer if you would have any legal recourse if they did not release the title? I wouldn't trust them as far as I could throw them! OMG you were current and they took the car!

I was just rereading your post and I noticed you were in the middle of mod and waiting to file. that is so wierd I am in the same exact situation. I have a first and two second mortgages with BOA. I have been approved but waiting for "official documents". The two second mortgages are a done deal, but still waiting for the last one to come. What a nightmare! I have recieved summons from CU for June 2nd judgement hearing, I will be over median if I wait until June to file (July we are back under median), so I really need these documents this month. Sorry for the rant but I know how you feel! I have spent at least three hours talking to one moron after another at the bank today, half of them telling me that the mod is not going through unless I come up with $6000, the other half telling me that the mod is already approved and I am not "late", don't worry! I could explode!

what you are going through is one of my biggest fears, I don't want to let my kids down either, but you will figure this out, I have confidence in you!

[BigJohn]

I think the credit union is going to take your money. You are better off having your daughter go to the auction and buy the car back for less.

What year and model is the car?