Credit Union Car Loan

[ConfusedinOC]

I have a car loan with my CU (credit union) titled to my wife and myself. The payments are deducted from our shared checking/savings account. My wife has a seperate account (on her own) with the CU for which she has a credit card a large balance.
If we were to file CH13 what would the CU do about the car loan? Can they repo the car even if we stay current on the car payments pre and post filing for Ch13 while we stop paying the credit card pre filing and discharging the debt?

[rrockinggramma]

credit unions are nasty in bankruptcy. They will not allow you to discharge your cc debt because of their cross collaterialization rules. They will claim that the cc is secured by the vehicles.

My experience has been that they will immediately close your accounts and freeze everything in them. My advise, get another cu account immediately and refinance the vehicles through them if you can. If you can't be prepared for a fight. It will get nasty.

[StartingOver08]

My experience with a CU was different than rrockinggramma's experience. I discharged a second mtg and large cc balance but reaffirmed my car loan and made changes to the car loan to reduce the payment. My CU was helpful, but naturally they did not volunteer to reduce the car loan payment! However, I filed a Ch 7 and not a Ch 13.

Check with your attorney to see how his experience has been with CU's in your area. But be prepared, just like rrockinggramma suggests, just in case.

[lrprn]

If we were to file CH13 what would the CU do about the car loan? Can they repo the car even if we stay current on the car payments pre and post filing for Ch13 while we stop paying the credit card pre filing and discharging the debt?

It depends on the contracts you both signed for the car loan and the agreement your wife signed for her credit card. (A question - are you connected with your wife's credit card as a co-signer or is the card solely hers?)

If there is cross-collaterization clause inside the credit card agreement, then it is possible that your CU can raid your mutual account if payment stop on the credit card before you file.

Your best option is to get your mutual checking account out of the CU before filing. Then there's no danger of the CU invoking the cross-collateralization clause.

If you are filing soon (like within the next month or so), then ask your bk lawyer if you should close the mutual CU account or leave $5 in it.

[sassiebaz]

Yes, find a way to transfer any $$$ to another account somewhere else and refi the car through another CU! Also, speaking from experience, make sure you have no direct deposits or refunds of any kind, including tax refunds, going into that account. They will take anything that gets routed to them once you file or even fall behind on any payments.

[ConfusedinOC]

Thanks for all the responses.
I am trrying to be proactive regarding the BK. I may need to file sometime late next year.
From the responses above I will be transferring all my banking except for the credit and car loan. If I do this would I still have to refinance the car loan at a different bank?

[rrockinggramma]

strongly recommended if you can pull it off