Question About Cross Collaterization

[swanse]

Here's some thing that I'm pondering. We have a 20K credit card with a credit union. We're up to date, balance owed is around 19K. We just got notice that because of "something that may or may not be in our credit report" our credit card account was closed. With this same credit union, we have an auto loan for about 35K.

My question is that is we go through Chapter 7 and decide to drop the credit card but keep the auto loan going (reaffirmed I guess), then the credit union will repossess the auto or not allow the lien to be released whenever the auto is paid off. Do we have to let both go? How have other handles situation where you have two loans with the same financial institution like this?

[tkharvey]

We had the same scenario. Be very careful of credit unions. I had not idea what the term "cross collateralization" even meant until the nightmare I experienced. My hubby and I both had high balance Visa's with a local credit union, as well as two car loans. We quit paying the credit cards (including them in bk), but kept our car loans CURRENT as it was our intention to keep them. One car was actually in my name but was my 17 year old daughters car (she made the payments faithfully every month). Long story short, they repo'd her car in the middle of the night, WITH HER PAYMENTS CURRENT. We ended up paying the car off (borrowed money from relative). Luckily, they did in fact release the title to us. Our attorney advised against doing this and that we were taking a chance, and that legally, they could withhold the title. Luckily they didn't, but we were sweating it out up until it came in the mail. Yes, they can and good chance they will repo car if you are delinquent on other debt. Good luck!

[sjcmCA]

Not every credit union claims cross collateral clause (CCC). Mine doesn't have it.

I have cc and auto loan but I wanted to keep my car. (I stopped cc payment in November 2009 but the auto loan has been current)

Per my request, the CU sent the reaffiramtion document but I didn't see any CCC in the document.

However, I requested the paralegal to contact the CU for another document to confirm that there will be no clauses between CC and auto loan.
Yes, CU sent a letter to confirm "No CCC". As such, I can keep the car but cc will be discharged.

I know there are several horrible CCC cases but try to contact the BK department or get your attorney / paralegal request the document to confirm CCC issue.
Without confirming this CCC issue, you must not reaffirm anything otherwise you would reaffirm all other debts as well.....

Whatever CU's policy is, you must be current on the auto loan to keep your car. But sometimes (it depends on the Districts / CUs), they don't allow you to reaffirm only the auto loan unless you reaffirm all other loans with the CU.

I was very frustrated when I was told about CCC for the first time but there was a way to keep my car. I was really glad to know that my CU doesn't claim CCC.

Good luck!

[BKFOURAB]

In my first BK, I had "cross-collateralization" problems with the Credit Union involving car and Visa card. My advice is let your attorney handle it. The CU will use every trick in the bag to stall your BK - - in an attempt for you to pay them more than they will recieve from the trustee at the 341 hearing. The CU intends to be a "pain" so that you will give in to them. Do you think the CU REALLY wants your car? No. (unless you have equity in your car, and that is rare indeed). They want money. Let your attorney deal with them, it will be worth the extra fees you pay your attorney for the adversarail proceeding with the CU.

The outcome for me was: I reaffirmed the car note (I'm using the word reaffirmed - - it was a contract of some sort my attorney made with the CU and I signed) but did not give them money during the Ch7 proceedings. (Why give them money when they can repossess at any time). I did pay the months I was behind on the car note, AFTER my attorney reached the deal with the CU. The CU figures you are in love with your car and you will do everything to keep it. That is, you will pay the note so that you will not have to pay your attorney $200/hr for the adversary proceeding in the Ch7. Your attorney knows how to play the game with the CU. Tell your attorney you want your car and are willing to pay for the adversarial costs. Discuss it and ask your attorney for his opinion, options, etc. And, be sure the car is worth keeping!

The lesson I learned was: no more CU accounts for me. They can really gum-up your financial situation.

[swanse]

Is there anyway to negotiate this during bk so that they will turn overthe title when you pay off the auto loan?

[BKFOURAB]

Yes. My attorney negotiated during the BK, I got the title after paying off the car note but not the Visa acct. Again, talk to your attorney or his assistant.

[aljohnson007]

I would immediately move all of my funds and direct deposits from the CU to another bank and then decide what to do about the loans.

[1kentwon]

CU Cross Colateral unsecured loan to car loan

I am dealing with this issue with my credit union now. CU has an all or nothing attitude, they faxed over a reaffirmation agreement with both loans , no change in terms before the trustee's ink had even dried after the 341 for my "No asset" chapter 7, ownly thing hanging it now is the car. So I am going to do the auto redemption thing, get rid of the unsecured loan. This is the ownly way I can deal with the unsecured loan. I have a car worth keeping, low payments at the moment, very low miles, owe about what car is worth. However, apparently the unsecured loan makes me upside down. CU will not work out a deal, at least not so far with the attorney. Attorney wants me to do the auto redemption. Credit union told him they will pick up the car day after dishcarge if I do not reaffirm. Real jerks. However, on a whim, I also( told my attorney,) droped off a proposal for a reaffirmation to CU over a week ago, on a Friday. Trying to get them to work with me, but NOW I do not trust them. CU told me saturday( 8 days later) they sent my proposal to the vice president of lending this past Tuesday, stating "but everything has to be handled by the attorneys. " I am sure it is a stall for some reason. Attorney knows I do not want to be pressured into a bad decision, but agrees with redemption as soon as possible.