Cross-Collateralization

[chfriend]

I need some advice. I've amassed a crapload of CC debt the past year (~$43,000) due to me being out of work on disability and then being out of work period. I tried going through CCCS to work out a payment plan and they were only able to get it down to about $1100 a month. I only take home ~$1450 as I only work part-time and am taking college classes.

Anyway, I discovered a lovely cross-collateralization clause on my DCU auto loan and I owe them ~$15,000 on my CC. Does anyone know if it is going to be possible for me to file Ch 7 and somehow keep my truck? I didn't want to include it in the bankruptcy proceedings but now I'm not sure I have a choice.

Help! If I lose the truck I'm screwed!

PS- I used to work for DCU and I didn't know about the Cross-Collateral crap they pull. Lovely!

[emoney]

Your question involves a legal review of your contracts with the CU. As a general rule most CU do have CC in their agreements.

For your situation if that is the case you may want to consider Chapter 13 instead of 7. This would require making monthly payments based on your abilty (income) and personal needs and expenses. The balance is paid to your creditors.
From what you have revealed you may not be able to afford college now.
regards,
emoney

[Keebler]

My understanding is this...

If your truck can be exempted under your Bankruptcy laws, then they can't take it. However, because it's a secured loan, you'll need to make all of the payments on-time as agreed to avoid having it repossessed. Even after you've made all of the payments they won't send you the title until you repay everythig you owe so you'll never actually own it.

So, the questions are these:

Should I repay everything and spend more than double the trucks value for the privelege of owning it? -- Probably not too smart.

Should I spend $275 a month for the next 20 months and then $0 per month after that to be able to drive the vehicle as if I were renting it? Maybe, but I'll bet I could use that $275 a Month and actually BUY something as good or better.

So then, the best answer is to let the vehicle go back to the bank -- even though I really don't want to.

[genseeker]

All creit unions have cross-collateralization clauses. The way to protect yourself from losing everything is open an account where you have no other financial connection and transfer everything to that account but keep a few $$ in the CU acct.

[rrockinggramma]

Your best bet in working with a credit union is to refinance your vehicle (perhaps use 722 redemption) and then BK the unsecured from the credit union. You will not win with cross collateralization from the credit union. And get another credit union account at another credit union entirely.