Car and Credit Card with Credit Union

[Blue14]

We have one vehicle that is financed through a credit union and we also have a credit card with them as well. Our credit union is saying that since we filed on the credit card in the BK, then we have to return our vehicle to them or sign a reaffirmation to keep the vehicle and the credit card. The credit union says the vehicle and credit card are tied together as one. So it's either keep both of them or none at all! What a mess b/c we never thought this would happen. We just thought we would keep our vehicle and let the credit card go. Does anyone have any knowledge on this? Our attorney says credit unions can do this. The other issue is, we filed a CH. 7 and were very close to not getting the 7 and having to file the 13 b/c of our income. So I'm also worried that if we let the vehicle go, then we may not qualify for the 7 anymore. The vehicle payment is $540 and the credit card payment is $290 (minimum monthly payment, nothing extra).

Thanks.

[PaKettle]

We have one vehicle that is financed through a credit union and we also have a credit card with them as well. Our credit union is saying that since we filed on the credit card in the BK, then we have to return our vehicle to them or sign a reaffirmation to keep the vehicle and the credit card. The credit union says the vehicle and credit card are tied together as one. So it's either keep both of them or none at all! What a mess b/c we never thought this would happen. We just thought we would keep our vehicle and let the credit card go. Does anyone have any knowledge on this? Our attorney says credit unions can do this. The other issue is, we filed a CH. 7 and were very close to not getting the 7 and having to file the 13 b/c of our income. So I'm also worried that if we let the vehicle go, then we may not qualify for the 7 anymore. The vehicle payment is $540 and the credit card payment is $290 (minimum monthly payment, nothing extra).

Thanks.

What does your attorney say about the issue of whether or not the lack of a car payment might throw you into a Ch. 13? Don't be shy, make sure he gives you a good clear answer on this. You do NOT want a 13!

It doesn't "sound" right to me that they can force you to keep the card payment along with the car payment if you reaffirm.

What I *THINK* you should do is not reaffirm on either, and see what happens. How much equity do you have in the car? If you just keep paying it after the bankruptcy (a "ride through"), would it be in their interest to repossess it or would it be in their interest to have you keep paying it?

Also, ask your attorney what the law is in your state: Is it a state where they CANNOT repossess as long as you keep making payments on time, or is it state where they CAN repossess "just because they want to" after a bankruptcy?

Definitely push your attorney to consult with you on these issues, that's what you're paying him/her for.

The way I see it, if you don't reaffirm, then you still qualify for a Ch. 7 and the worst that can happen is that they 1) repossess the car; and 2) they make you pay half on the card if you had any big purchases or transfers within the last 6 months.

That's better than filing a Ch. 13!

But remember, I am not an attorney, I don't even play one here on the forum, I am just giving you an idea to investigate with your attorney.

[keepmine]

The CU does have that right. It's called cross-collateralization and if that clause is in your contract, you're sunk.
As HHM likes to say-"Bk and credit unions don't mix".

[AngelinaCatHub]

[PoorGrammyinBK7]

AngelinaCatHub - just wondered which credit union that was, since most of our secured debts are also owed to a credit union here...PM me if you want. I can't believe they dishonored checks when the money was there! Is that typical?

[Blue14]

What does your attorney say about the issue of whether or not the lack of a car payment might throw you into a Ch. 13? Don't be shy, make sure he gives you a good clear answer on this. You do NOT want a 13!

It doesn't "sound" right to me that they can force you to keep the card payment along with the car payment if you reaffirm.

What I *THINK* you should do is not reaffirm on either, and see what happens. How much equity do you have in the car? If you just keep paying it after the bankruptcy (a "ride through"), would it be in their interest to repossess it or would it be in their interest to have you keep paying it?

Also, ask your attorney what the law is in your state: Is it a state where they CANNOT repossess as long as you keep making payments on time, or is it state where they CAN repossess "just because they want to" after a bankruptcy?

Definitely push your attorney to consult with you on these issues, that's what you're paying him/her for.

The way I see it, if you don't reaffirm, then you still qualify for a Ch. 7 and the worst that can happen is that they 1) repossess the car; and 2) they make you pay half on the card if you had any big purchases or transfers within the last 6 months.

That's better than filing a Ch. 13!

But remember, I am not an attorney, I don't even play one here on the forum, I am just giving you an idea to investigate with your attorney.

We tried calling our attorney today, but no answer yet, just left a message for him. Yes, we need to find out if we let our vehicle go, will we have to file a Ch. 13 and if so, then we probably would keep making the payments on the vehicle to keep the Ch. 7 rather than monthly payments for a Ch. 13.

The credit union says its cross-collateralization, so we either keep the card and vehicle or let them both go.

We don't have any equity in the vehicle b/c we bought it brand new a few years ago. It's probably only worth what we owe on it. My fear of just keep paying the payments and not signing a re-affirmation, would be that they decide to come and get the car b/c we filed the credit card in the BK. Also, I'm not sure that the Ch. 7 would go through without the re-affirmation showing we would pay that car payment every month. I'm no expert on this, but I do know that I would rather keep my car, than to pay a monthly payment for Ch. 13. I guess we have some questions to clarify with our attorney.

[Blue14]

We spoke to our attorney today about whether we would have to file a Ch. 13 if we let our vehicle go. He said that once we have had the creditors hearing, then they won't look at anything after that, so we should still get a Ch. 7 even if the car goes back. I'm kind of confused on this b/c it looks like people here on this forum have had problems after the creditors meeting. We are still undecided on letting are vehicle go or not, but remember that the vehicle is cross-collateral with the credit card as well.

[AngelinaCat]

AngelinaCatHub - just wondered which credit union that was, since most of our secured debts are also owed to a credit union here...PM me if you want. I can't believe they dishonored checks when the money was there! Is that typical?

Hi PoorGrammyin BK7: I am 'Hub's wife. I don't know if I am allowed to give the name of the insitution or not. But I will say that they are housed in Dayton Ohio. My husband got his account there when he became employed by the NCR Corporation in 1962, and has had the account ever since. There have been no problems until this bit with the BK notices that went out.

Our attorney's assistant acutally spoke with someone in their office the day we filed, and were assured there would not be a problem. However, after the mailing went out we got a 'nasty gram' form letter from them, that because we had violated all the other members' trust, yada, yada, we would be put out and to turn in the bank cards, and cancel any and all any electronic deposits, and automatic draws--which is the way we do the majority of our business.

As soon as this happened, 'Hub got on the phone and talked with some very nice people up there, who assurred us that we would be okay, but that we had to reaffirm our car and overdraft protection via THEIR paperwork, NOT our attorney's. That came was signed and sent back; they presented it to their couurst, and all was okay, but it took about two weeks of VERY ERNEST fingernail and toenail biting on our parts. They did reverse and restore the NSFs.

We do not know if other CUs do this or not. If you search on our nicknames, you will find other references to this situation.

[FreshLikeADaisy]

Blue14, for what it's worth, I think PaKettle gave you some very sound advice, confirmed by your attorney: delay. Just don't sign anything, don't do anything, until well after your 341. If anyone asks, you're still thinking it over. You can reaffirm (and disavow a reaffirmation, as well) until your discharge, if I remember correctly, so you can easily wait until the last minute to decide what you want to do.

In the end, the credit union is holding you to this cross-collateralization clause in order to force your reaffirmation of the dischargeable debt, NOT to repossess your vehicle. They want your cash, not your used car, so you do have something of an advantage here: on paper, they're winning, but you have what they want and not the other way around. By waiting, you may be able to do a ride-through, especially if the credit card debt is not big, because they may decide in the end that it's too much trouble to hold you to the cross-collateralization clause if they know they will end up with your credit card debt AND your used car. Your atty is right about waiting until after the 341 to give the car back, if that's what you feel like you need to do; if there are no other issues with your bk it is *extremely* unlikely that you would be in jeopardy of conversion to a 13 once the trustee has issued his determination of no assets. Just make sure that you keep your car payments current while you leave the credit union hanging , and start looking into replacing it just in case you decide it's too much hassle to keep it.

Personally, I would rather trim my nose hair with a lit match than reaffirm a dischargeable debt that I didn't absolutely have to, but that's just me. Good luck!!!

[Blue14]

Thank you for your responses. I think we may try and do a ride-through by continuing to make the payments and not sign the re-affirmation. Does anyone know if this is possible or know people that have done this and it worked?
Thanks.

[Bit_Image]

It might work until the loan is paid, and then they will REFUSE to issue you a clear title until the credit card balance is paid. I would let them both go back to the CU.