cross collaterization question

[Itried]

I have a car worth about $14K and I owe about $19K (negative value) with my credit union. I am current on the car note. I also have a credit card with a 10K balance on it with the same credit union. I have stopped paying the credit card in December. I will file in Feb Chapter 7.

I would prefer to keep the car and pay the $400 a month car payment. I currently have a good interest rate on this car. My questions is will they make me surrender the car in the BK even if it negative value and current? or will they want me to keep both?


I am just not sure how they look at cross collaterization.

[whywhywhy]

The debts are still separate. You would only have to reaffirm on the car. The cross collateralization means that they could repo your car to take care of the past due credit card, even if payments on the car loan are current. I'm not sure about the negative equity part of your question, tho.

[rrockinggramma]

Credit unions are not fun to work with in a chapter 7. They can and probably will make you reaffirm both debts to keep the car. You might want to check into a 722 redemption on your car and discharge all of the credit union in your chapter 7. We ended up having to do that. Also, open another account somewhere else before you file. It will get really nasty at the credit union.

[magyar123]

The debts are still separate. You would only have to reaffirm on the car. The cross collateralization means that they could repo your car to take care of the past due credit card, even if payments on the car loan are current. I'm not sure about the negative equity part of your question, tho.

The car and the credit card are separate debts.If you reaffirm the car it will only be the credit card that will/might be discharged in bankruptcy. The credit union will then only rob you of any funds that are in your savings/checking account - cross collaterization, but can not repo the car (which you have already legally reaffirmed.)
Close your checking/savings accounts that you have with the credit union (except for the initial membership deposit) a few days before you file, and open a checking/savings account at another bank.

[songbird81]

Cross collateralization means everything is tied together. If you want to reaffirm your car, the CU may only allow it if you also pay the CC debt. Some CUs will allow you to reaffirm just the vehicle. We had two vehicles in our BK, each one at a different CU. One wanted everything paid to keep the car, and one would allow just the car to be reaffirmed. We ended up surrendering both though.

[dp1969]

We have a loan of $8900 remaining on our car, through our credit union and had a credit card balance of $4500 before we filed. We wanted to stay with the credit union so we paid off the cc and reaffirmed the car loan. Our situation is different in that the value of the car was $20k and we have $11k in equity (after the loan). My sister in law (who works at the same cu) said they would close our accounts if we didn't pony up the money for the cc.

[Boscoe]

Big Boy, I think you are forgetting something called "the automatic stay". As soon as they filed for bk, the CU CANNOT repo the vehicle - period.

I assume you must have thought that they had not filed yet, because as soon as it is filed, the stay is in effect.

[dp1969]

Big Boy, I think you are forgetting something called "the automatic stay". As soon as they filed for bk, the CU CANNOT repo the vehicle - period.

I assume you must have thought that they had not filed yet, because as soon as it is filed, the stay is in effect.

Boscoe-
Just curious (if you don't mind)...did your BK 7 turn from "no-asset" to "asset"? What were they looking at to have an asset case.
Just wondering...I feel ours might turn into an asset case. We have some items that my lawyer is claiming exempt (system 2) but I think we are going to fall over the allowed exemption. He "thinks" it should be fine...in the mean time, I'm worried.

[Itried]

Thanks for the tips

Thank you all for your help with this situation. I meet with my lawyer tomorrow and i will discuss my situation with them. My credit union is in California and I live in Geogia, so if they try to come after the car it should take a little while. I hope I get the automatic stay.