New car & Cross Collateral Clause

[mhman]

I put a thread regarding the cross collateral clause (CCC) with a credit union before.

Here is the link.

http://www.bkforum.com/showthread.php?t=44594

I found that there is a CCC with my credit union. It means that I will lose my car soon if I stop CC payment. But I need a car since I am living in a rural area.

Since my cc and car loan is current, there might no problem to trade in the car and buy a new one now. (I am planning to file in December 2009 or January 2010)

Car loan amount: $6k / Car value: $9k
Credit Card: $20k

When I trade in the car for a new one (plan to buy a used one actually), there is about $3k equity used for downpayment. Will this be regarded as a income in the means test?

Even though I stop all payments from this month, my credit score is still good.

I think this is the only way to overcome "Cross Collateral Clause". The current car is also showing some transmission problem. I think this is the last chance to buy another one. Are you seeing any problems on this plan?

I want to stop sleepless nights on this issue.

Thanks!

[aljohnson007]

I would also think about opening a new checking/savings account now as you do not want to have funds in the CU when you miss a payment. Otherwise, sounds like a good plan.

[Chowder]

I put a thread regarding the cross collateral clause (CCC) with a credit union before.

Here is the link.

http://www.bkforum.com/showthread.php?t=44594

I found that there is a CCC with my credit union. It means that I will lose my car soon if I stop CC payment. But I need a car since I am living in a rural area.

Since my cc and car loan is current, there might no problem to trade in the car and buy a new one now. (I am planning to file in December 2009 or January 2010)

Car loan amount: $6k / Car value: $9k
Credit Card: $20k

When I trade in the car for a new one (plan to buy a used one actually), there is about $3k equity used for downpayment. Will this be regarded as a income in the means test?

Even though I stop all payments from this month, my credit score is still good.

I think this is the only way to overcome "Cross Collateral Clause". The current car is also showing some transmission problem. I think this is the last chance to buy another one. Are you seeing any problems on this plan?

I want to stop sleepless nights on this issue.

Thanks!

Stop any direct deposits to the CU account. Since they probably wont let you close the account, keep only a few dollars in it.

Open an account at a bank you've had no prior association with.

Then I'd study on that car trade deal a little more. Go to a few lots to get an idea what exactly you're looking at. You might be better off keeping the car you have, since that equity you have can be exempted.

[mhman]

Thanks for a quick response. I appreciated that.
Yes, I opened a new checking/saving account and changed the direct deposit also. The only concern is that I am getting another car loan of which amount is higher than the current $6k.

But this would be helpful to put me in chapter 7 since I can keep a similar car expense in the means test.

[mhman]

Then I'd study on that car trade deal a little more. Go to a few lots to get an idea what exactly you're looking at. You might be better off keeping the car you have, since that equity you have can be exempted.

The best deal is to keep the current car. But now I know that at once I stop paying CC payment, the car will be repossessed.

Dillema is that I must have a car before, during, and after BK filing.

If I am supposed to lose the car, I'd better let it go and find a new one which can be kept through BK.

What I am going to make sure is that there is no problem to trade in my car for a new one (I hope CU release the title since I am current on car loan and CC). Thanks!

[sjcmCA]

I had a similar problem. But my attorney called to my credit union by phone and made sure with a manager that there is no cross collateral clause with the credit union.
It totally depends on the credit union. Until you confirm this with cu, you don't want to assume that ccc is in place. Good luck!

[OhioFiler]

The excess equity in your car is not income. You're merely transferring one asset for another.