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Cross Collateralization question

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  • Cross Collateralization question

    My wife and myself filed Chapter 7 BK and got our Discharge last year. Our lawyer went through the reaffirmation with our Credit Union on the two auto loans, knowing the courts would deny it. I'm assuming he was letting the Credit Union know we were going to keep paying on those.

    Anyway, we have been paying our monthly payments, and we are getting close to paying these amounts off from these vehicles. Knowing the Cross Collateralization with Credit Union, we will more and likely not see our titles mailed to us once these amounts are paid off. Our attorney just said to run the vehicles until you no longer want them. Just wanted to see if anyone had the same situation happen to them ? Once you were finished your balance, did you just give the vehicles up to the credit union, or did you wait until you got another car then asked credit union to pick them up.


  • #2
    You did not mention it, but my guess is that your CH7 discharged credit card debt with you credit union. I had a similar situation and I can tell you that they will not allow you to slip away with the vehicles and issue you the title to them until the credit card debt is satisfied. You lawyer should know this and advised you of it. You could drive the cars until they drop, but the credit union will still expect to be paid. Read your auto load contract. Credit cards and auto loans with a credit union are risky.


    • #3
      Thanks for your reply. It was a chapter 7 discharge.

      However what I'm wandering is once your finished with the vehicle, did you plan to call the credit union to tell them to pick it up once your finished with the vehicle maybe it has mechanical problems and not worth the repair or were you planning on junking it since your not able to get title. My attorney told me to drive it till its end but I wanted to find out what other people did once they replaced the vehicle. If this isn't the case for you, what yours plans in the future once you think of replacing it?


      • #4
        I paid the credit union what I owed them. I had a CH13 and I wanted zero blowback when my discharge comes. I want to use the vehicle as a trade in and can't without the title. You may wish to check with your attorney again. The credit union can still take you to court for payment. Read about cross collateralization in your auto loan papers, it's there.


        • #5
          With chapter 7, my attorney said and I did verify my credit report for those loans at credit union all say included in bankruptcy. I had two options according to lawyer, hand vehicles back to credit union or keep paying on them until balance of vehicles are paid off but knowing I'm never getting the titles.

          The part that is my main question knowing I'm not in debt to credit union, is what have other people done with their vehicles in my situation, turn them in once I'm no longer want them, two junk the vehicles, or pray credit union makes mistake and sends title ? Just wanted to see what other have done without title to vehicles


          • #6
            Maybe just talk to your credit union and see what they have to say.


            • #7
              Maybe I'm being thick, but why, if you have paid off your auto loans do you feel the credit union won't send you the title to you cars. If you had a personal loan or credit card with them then cross collateralization would apply. What am I missing here?


              • #8
                Originally posted by kmattin View Post
                Maybe I'm being thick, but why, if you have paid off your auto loans do you feel the credit union won't send you the title to you cars. If you had a personal loan or credit card with them then cross collateralization would apply. What am I missing here?
                The cross collateralization means that another debt with the credit union, probably a credit card, was also secured by the car. The credit card debt may have been discharged, but the lien remains. So, unless the OP pays off the discharged credit card debt, the credit union does not have to turn over the title.

                I haven't had personal experience, but if it were me, I would contact the lender when I am ready to give up the car and ask what they would settle for and offer them a fraction of what they ask for and then negotiate from there. If they didn't settle for an amount that I thought was reasonable and they won't come get the car, I would look into giving it to a charity. I am pretty sure I have seen charities advertise that they will take cars that are subject to a lien. If a donation doesn't work, I'd do some research to see if there is a way to force the lender to either release the lien or take the car.
                LadyInTheRed is in the black!
                Filed Chap 13 April 2010. Discharged May 2015.
                $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!


                • #9
                  I would be more worried that you are going to pay off the car and then the credit union is going to come and take it the next month when you don't continue making payments towards the cross colateralized debt.


                  • #10
                    Originally posted by Txdebt View Post
                    I would be more worried that you are going to pay off the car and then the credit union is going to come and take it the next month when you don't continue making payments towards the cross colateralized debt.
                    Exactly. Finally someone who gets it! If the credit union is going to enforce its rights under the "cross-collateralization", they aren't going to do so by withholding title to prevent you from junking a worn-out car years in the future. They are going to do so by waiting until you pay down the car loan and then repossessing the car, thus recouping some of their losses and leaving you without a vehicle and without money that you could have used to buy another car.


                    • #11
                      This is concerning. We had a loan with the credit union and kept the car. Our chapter 13 payments will pay the car off plus about 3k of a credit card. I think a few thousand remained unsecured. Does that mean if we actually get discharged, the credit union will hold the title for the unsecured amount that the plan doesn't completely pay?


                      • #12
                        WOW, I knew about cross collaterization, but wasnt aware that after paying off my truck that i wld not be able to get the title! So basicall Im leasing a vechicle now. We filed ch. 7, i had two loans with the credit union, Advancial Fed. Cred union, I told the lawyer i needed to keep truck so he told me to keep paying on it. They did thouhg, terminate my online accesss and will not send me a balance sheet r anything without going thru my lawyer!


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