Can I save my car from Credit Union? - Oh, No!!!

[mhman]

By accident, I found some articles regarding "cross collateral clause".

I have a car loan ($5k) and a credit card debt ($20k) with a credit union. I didn't know that almost EVERY credit union has "Cross Collateral Clause" policy.

Based on "Cross Collateral Clause" at a credit union, I would not be able to re-affirm my car. Am I understanding correctly?

I am planning to file chapter 7 in December 2009 or January 2010.

Should I pay off the car loan NOW to keep my car, and then file BK to discharge CC debt later? Or Credit Union never release the car title until I pay off all the Credit Card Debts as well?

When I found about "Cross Collateral Clause", I almost fell on the ground!

Is there any way to re-affirm the car through BK? I would make $5k to pay off the car loan before BK but I am not sure if they release the title until I pay off the CC debts.

BTW, will it apply another car loan with Chase Auto Finance? (I have a CC debt with Chase Credit Card - I want to re-affirm the second car as well)

[StartingOver08]

I was able to reaffirm a car thru my credit union and remove the cross collateralization clause at the same time. I had to remove the clause, because I did not reaffirm the second mtg or the credit card debt with them. BUT, you specifically have to have this written in your agreement and they will not volunteer to remove the clause, you have to negotiate it with them. The time to do this is after you file. You speak directly to the BK dept of your CU.

If you search on cross collateralization here in this forum, you will see a ton of threads about removing it.

[mhman]

Thanks a lot StartingOver08!

Your experience gives me a hope.
I will research more about the Cross Collateralization Clause.

My car loan balance is $5k but the car value is $9k - $11k. I am not sure if the Credit Union will be working with me to reaffirm the car loan. They would be willing to re-possess and sell it for their loss in the Credit Card Balance.

Anyway, it seems that I have to be current on my Credit Union Visa Card otherwise my car will be repossessed even though the car loan is current, right? (If I want to negotiate with them in BK)

Anybody knows if there is any cross collateral clause between Chase Auto Finance and Chase Credit Card?

If yes, it would be a disaster for me because there would be a possibility to lose both cars through BK.

[StartingOver08]

OP, I was not current with my CU credit card when I filed BK, but I was current with the car payment. I selected 'intent to reaffirm' with the car. The first reaffirmation agreement that came from the CU (automatically, before I spoke to them) had a larger balance than what was actually owed on the car.

I called to find out what what going on - that is when I discovered they were trying to move some of the balance from the cc to the auto loan. Naturally, I did not agree. So after some discussion we came up with a mutually beneficial plan. They would reaffirm the auto loan, drop the interest rate a little, stretch out the payment for another two months, take off the additional balance they added from the credit card, drop the cross collateralization, and allow me to skip the current month (that was during my automatic stay). I also had them add a clause specifically about them sending me the title immediately upon payoff.

When we agreed, the CU put the new reaffirmation in writing, sent it to my attorney, and I signed off. They signed off, the attorney signed it, and it was filed with the court. I was prepared to surrender the vehicle the entire time. In fact, on my other car I ended up surrendering because that lender (Independent Bank) was totally uncooperative. You have to do what is best for you and your long term plan.

I did not have as much equity as you have though. Are you sure you have that amount of equity? I checked my value against the Black Book value to make sure I did not over value the vehicle (we have to use NADA Retail in our district to file, which waaayyy over actual value). But when you are negotiating, the BK dept realizes that actual value is less than KBB or NADA show. They can not repossess during the automatic stay without first getting a Relief From Stay from the court.

Don't let them tell you that you have to reaffirm both. DO NOT REAFFIRM CREDIT CARD DEBT. If the CU tries to make you do it, it is better to surrender the car.

[OhioFiler]

Thanks a lot StartingOver08!

Your experience gives me a hope.
I will research more about the Cross Collateralization Clause.

My car loan balance is $5k but the car value is $9k - $11k. I am not sure if the Credit Union will be working with me to reaffirm the car loan. They would be willing to re-possess and sell it for their loss in the Credit Card Balance.

Anyway, it seems that I have to be current on my Credit Union Visa Card otherwise my car will be repossessed even though the car loan is current, right? (If I want to negotiate with them in BK)

Anybody knows if there is any cross collateral clause between Chase Auto Finance and Chase Credit Card?

If yes, it would be a disaster for me because there would be a possibility to lose both cars through BK.

Not an issue for you.

[hereforinfo]

If you pay it off before filing bankruptcy, you will have to make sure you have enough exemptions to cover the asset.

[mhman]

StartingOver08: Thanks again for sharing your experience with CU. It's very helpful!!! I am seeing a hope to keep the car. Thanks!!!!


OhioFiler: What does it mean? Cross Collateral Clause doesn't apply to me at all? Sorry. I am a newbie here so I want to make sure what you mean. Thanks,

hereforinfo: There is about $24,000 wildcard exemption in California. As such, there will be no problem on exemption. But the problem is that I would not get the car title until I also pay off the credit card balance due to Cross Collateral Clause. That's what I want to make sure now. Thanks,

[OhioFiler]

Chase isn'y going to be an issue, No cross-collateralization.

[tkharvey]

My experience was terrible!

Had a car loan with my local credit union as well as a large credit card with them as well. Our attorney informed us to stop paying credit cards since we were planning on filing BK soon, but to continue to make the car payment since we wanted to keep the car. OUr BK filing got delayed (we were waiting on our house loan mod to go through) before we filed. When our cc payment went past due, the car was repo'd out of our driveway in the middle of the night when I wasn't even late with the car payment. They exercised their right to "cross collateralize". What a nightmare it turned out to be. I, like you, "MHMAN" thought it may be an issue of receiving the title since the outstanding Visa would be included in the BK, but never thought they would repo the car since I wasn't even late. It was a terrible experience. The end result was the credit union accepted payment in full (around 4500) to get the car back and they "promised me" they would mail the title upon payment in full. They knew I was going to be filing BK so I was a little leary that I would ever get the title. Even my BK attorney told me to be careful and that I should use that money we were going to use to purchase another car. We went ahead and took our chances and paid the car off. After sweating it out for several days, the title came about ten days later. All in all, though, I'll never do business with credit unions again. Yeah, if there's anyway you can pay the car off before you become delinquent on the other account, do it! You'll save yourself alot of stress and worry in the long run.

[tkharvey]

Also just read your post again. Kinda eerie that your numbers were almost identical to mine (car loan about 5K credit card 20K)!!!!!!!!!!!!!!

[mhman]

tkharvey, Thansk for sharing your experience. It is what I am concerning now.

However, I am not sure if the Credit Union will release the car title after paying off car loan if there is a outstanding balance on my credit card account.


Paying off $5k car loan before filing BK would be regarded as a fraud? I don't know about this either.

Attorney told me to stop all payments (except cars) until I file BK in December. He didn't know about the Credit Union. I really don't know what to do.

If I can negotiate with CU for re-affirmation during BK, it should be the best one. But if this not the case, I just start saving all for the future car.

I can't afford to buy another car after BK. It's a sleepless night..............