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Cross-collateralization AFTER bankruptcy discharge?

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    Cross-collateralization AFTER bankruptcy discharge?

    I am reading the credit card agreement for my local credit union, and the cross-collateralization clause jumped out at me.
    CONSENSUAL SECURITY INTEREST:
    You agree to give the Credit Union a security interest in any and all fund on deposit in accounts in which you have an ownership interest, both now and in the future, with the exception of retirement accounts or any other accounts that would lose special tax treatment under state or federal law if given as security. The granting of this security interest is a condition for the issuance of any Card that you may use, directly and indirectly, to obtain extensions of credit under this Agreement. This means that, if you are in default, the Credit Union can, without prior notice to you, take funds from any eligible account(s) in which you have an ownership interest and apply them as a credit against your credit card Account in any amount available up to the entire balance. Collateral securing other loans you have with the Credit Union may also secure this loan.
    Emphasis mine. Does the bankruptcy discharge remove this security interest in funds deposited after the discharge?

    For example, I have a mortgage with this credit union. The mortgage was discharged by the bankruptcy, no reaffirmation was completed, and I'm doing a "stay and pay" after discharge more than a year ago. Would this clause mean the credit union could come after my account if I miss a payment? I'm current, but what if I'm not?
    Chapter 7, above median, no asset. Discharged with no UST involvement.

    #2
    I think you need to look at the mortgage agreement to see if there is a similar clause there to determine if a default on the mortgage can result in seizure of deposited funds.

    Did you have debt on the credit card that was discharged? If so, based on the last sentance, they may be able to place a lien on your home if that wasn't addressed in your BK.
    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!

    Comment


      #3
      I would move the money if before you decide to default

      Comment

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