Pay Car Off Before Filing?

[Maxx215]

I have retained an attorney and I am in the process of getting the $2,000 fee paid so that my Chapter 7 can be filed. Unfortunately I just have a question about my car.

My car loan is through a credit union which I also have a personal loan and a credit card with, so I'm sure that there is going to be an issue with cross-collaterization. I currently am one month behind on my personal loan, and 2 months behind on my credit card. With my car loan I only have the June 20th & July 20th payments left, which the total payoff is like $690 (give or take a few dollars). I'm trying to figure out if I should pay the car off before getting the lawyer paid, or if I should just put that $690 towards what I owe the lawyer. I am just worried that if I pay the car off the Trustee might end up taking it anyways. That's if the credit union would even give me the title if I pay it off first.

The trade-in value for the car is about $11,500. My case will be filed in the Eastern District of Pennsylvania.

[justbroke]

Ah, yes. The old cross-collaterazation (CC) problem. It almost always comes to haunt debtors when they file. What I have learned is that many of the credit unions are happy to remove the CC on the vehicles. What may be interesting, though, is that you have a lot of equity and you are just weeks away from paying off the vehicle. I don't know how that will play out with your credit union. Combined with being behind, it will probably be tough to ask the credit union to remove the CC.

This is certainly a great question for your attorney. There are just too many variables for a cut and dry answer.