Ordered to pay off martial car for spouse in divorce. Past due on other accounts.

[Gabe]

I got divorced last year and the car the ex was driving was in my name with a loan on it.

I then went unemployed for 7 months and now make half of what I did before.

I've been able to keep up with everything except a credit card and loan that all reside at the same credit union as the car loan on her car.

A family friend wants to give me the money to pay off her car, but I'm afraid Navy Federal won't release the loan since I am 6 months behind on everything else.

Are my assumptions correct?

Anything I can do?

[df04527]

yes - More than likely you will run in to cross-collateralization with them which would result in a combined balance being owed to receive title to the car. I know others here have personal experience with them but maybe you can catch up on the other loans to get them out of default then pay off the car?

[bcohen]

In bankruptcy, you have the right to redeem the collateral (the car) for its current value, taking into account mileage, wear, and any damage. If you redeem the car--either by taking out a 722 loan, or by paying the redemption amount with exempt funds, then the credit union must release the title, regardless of any cross-collateralization clause they might have.