Cross collateralization

[tiberius]

341 meeting 1/28/14 no problem
Car loan and signature loan w/credit union

Car Loan 410 sig loan 275 total 685 per month.

If we reaffirm, have to pay both. Truck value 20,000.

loan 6850

owe 11500 on truck


If we walk away from both will this throw us into Ch 13 from filed ch7?
Thanks

[LadyInTheRed]

I don't know why it would.

Since the truck is worth more than the balance of both loans, have you asked the lender if they will let you do a ride through? (keep paying on both loans without reaffirming)

[tiberius]

We stopped paying the signature loan in Sept under advise of lawyer, have had our 341 meeting but have not signed any reaffirmation papers. The car loan is supposed to be tied to the signature loan in the cross collaturalization.

We have been paying on the car loan in hope of keeping the vehicle, but it doesn't look like that is going to happen because of the signature loan being attached to the car loan.

Is there any other option to keeping the car but somehow breaking the cross collateralization and discharging the signature loan or should we just give it up?
Thanks.

[LadyInTheRed]

With the balance of both loans being less than the value of the car, I don't think so. But, confirm that with your attorney.

Did you mention being thrown into a 13 because that would be the only way to keep the truck while being behind on signature loan payments? Since you have some equity in the truck, it may be worth trying to negotiate a reaffirmation where the lender allows you to catch up on the payments. But, only if you are very comfortable that you can make the payments on both loans until paid off. Depending on your DMI and whether you would be in a 3 year or 5 year plan, it also may make sense to convert to a 13 to save the truck. It really would depend on whether your total plan payments plus attorneys fees to convert would save you money. If the equity in the truck is less than the cost of a conversation, you might as well give up the truck.

ETA: It is also possible that after your Chap 7 discharge without a reaffirmation, the lender will work with you to let you catch up on the signature loan.