Can they do this?

[BrighterFuture]

We're having massive problems with a creditor.

My husband and I both have a personal loan through them. Totalling about $4400.

We also have our vehicle loan through them. That is current.
(well...they say its not...the woman said if I made an almost $1300 payment, they could defer it for 30 days, so I did, and now she says she said no such thing, so they are trying to collect September's payment that was supposed to be deferred...but the whole thing is on tape, so I am not worried about my end....)

Anyways.

Today my husband spoke with this woman and she said they are filing on Monday about the UNSECURED personal loans and they are going to try to take the van from us as collateral.

But isnt that the point of the unsecured loan? We didn't put anything as collateral.

Can they take a vehicle that is current in payments because of an unsecured loan default?

ASAP answers would be sooooooo appreciative.

We're in Wisconsin if that makes any difference.

THANK YOU!!!

[SinkingFast]

You'll have to look at your agreements/loan docs. Read them over very carefully. You could have Cross Collateralization clauses in your loans with this Creditor.

Cross Collaterailzation allows the Lender to tap on source when you're delinquent on another acct. Most common is the Bank you have your checking acct with, you'll also have a CC with. You're late on the CC, the Bank will withdraw funds from your checking.

So, yes, possibly, the Lender could seize the van as collateral for the unsecured loans.

[BrighterFuture]

thank you!

would that be just the unsecured loans, or the documents on the van, too?

[treehugger1]

Is the creditor a local bank? In such case, you might have cross coll. However, I'm not so sure a creditor can assign security to unsecured debt, which is what would seem to be happening if they attempted to tie your secured debt to your unsecured. For any creditor or collector to pick up some security in a vehicle I believe they would have to get a judgment and file a second lien. I'm not sure what is legal, but unsecruded creditors or CAs might try anything!

[treehugger1]

Interestingly enough, I found some information on some very large national creditors related to auto financing. Some contracts stipulate that a 2nd lien canot be placed on a vehicle. they don't mention what the "punishment" would be, but I'm guessing they could repossess. However, by the time some other creditor had a judgment and a 2nd lien attached to a vehicle, I would think it would be too late for the original creditor to do much about it.

In my opinion, I think it generally serves noone's interest to go for a 2nd lien on a vehicle, especially if the debtor is upside-down (owe more than the vehcle is worth.)

I currently have an auto financed through a company that I owe $10K to credit card debt and $15K for an auto debt. I stopped paying the CC's but continue to limp along on the auto. Th ebook value of the auto is now about $3K less than what I owe. I'm going to hazard a guess that this particular finance company would just as soon get the auto payment and nothing on the credit cards, than get NOTHING at all. But, who knows what bizzarre notions a creditor will have.

[jp2861]

You'll have to look at your agreements/loan docs. Read them over very carefully. You could have Cross Collateralization clauses in your loans with this Creditor.

Cross Collaterailzation allows the Lender to tap on source when you're delinquent on another acct. Most common is the Bank you have your checking acct with, you'll also have a CC with. You're late on the CC, the Bank will withdraw funds from your checking.

So, yes, possibly, the Lender could seize the van as collateral for the unsecured loans.

Where would I find this information? I don't receive any statements via mail, all online. I don't have any paperwork on any of my CC's.

[BrighterFuture]

It's through Landmark Credit Union.

And the van is def. upside down, we owe $18,500 (but thats not payoff) and the stupid thing is worth only about $13k or so, maybe less, it was in a bad accident.

[keepmine]

CU's generally have cross-collateralization clauses {also known as 'Anaconda Clauses}. Looks like you could well be hung. Look at the paperwork from your van financing and the paperwork from when you opened the account with the CU.