Having to give back auto because of CU Cross collateralization

[Anonymous]

I will never again do any business with a CU.  They all seem to have that loophole where they can attach any unsecured debt to a secured debt without cause.  In my case it was a VERY sizable credit card that blew up on me.  Im able to keep paying the auto ontime.  I have never been late on it.  But since the CC went late, they tacked it on the auto.  And in order to pay off the auto, I will be paying off the CC too.  The CC is almost as much as the auto was new.  So there is no way Im going to pay on this for 15 years or pay double for the car.  So they have forced me to give it back and file BK.  They could have easily let the two be separate, and they wouldnt be eating the car overage as well, but I guess eating an extra $20k in a bk for a CU that has 50 billion dollars in assets is a drop in the ocean.  Oh well, I really liked that auto.  Its currently up to date, but wont be for much longer.  Should go 30 days late in the next two weeks.  Im wondering how long it will take before they motion to come get it?  I have been reading that even with the BK filed, they will likely wait until its 90 days or more late to start the repo process.  Their loss.

[Anonymous]

Edited post. I misunderstood what you posted initially. Sorry, that is a crappy situation. 

[Anonymous]

I also have one car financed with my local CU. I also have a small limit credit card with them as well as a personal loan. During my consultation with the bankruptcy paralegal she explained to me that CU's do have this cross collateral going on. I told her I would like to keep my car. Never been late. She told me that I would be able to reaffirm and the CU didnt have a choice but to. Sounds good but we shall see when I finally file. If this isnt the case then they can have it.

[FireMedic1]

Well that suckas. But. I would still make payments until they get it. If you havent been late on it. Why have a few or 1 30 day lates on your report just because the situation sucks. The car may go away but the lates stay for 7 yrs.

[Anonymous]

Firemedic, will the CU not just let them keep the car If they keep paying and keep it current?

After bankruptcy will lates show back up? Right now my credit report shows payment history unknown on the accounts that are in BK. Does this mean the lates will come back upon discharge?

[FireMedic1]

Now I'm not a CU expert at all. When I reaffirmed Cap1 didnt report during the BK proceeding. But then it kicked in again reporting after DC. Most banks if you do not reaffirm. Most will let you keep the car as long as payments are made but they will not report to the CRA's. Any lates before during or after a BK will still report. Pre-BK lates dont go away because of the BK. Once late always late. Hope that helps.

[DaveInAZ]

Yes, that's true for most bank, but CUs are a different story. Most CU's require you to reaffirm or they will repossess - for most banks 30+ days late on payments is the only thing that makes you in default, but most CUs have a clause in the loan docs that just filing BK makes you in default, so even if current on payments they can repo if you don't reaffirm. And many CUs have the cross-collaterization clause the OP described, so if you default on an unsecured loan from them - CC or personal loan - and you also have a secured loan with them - car, mortgage or Home Equity - and you default on the unsecured loan it suddenly becomes secured by your car or home. I like CUs and most of my banking accounts are with CUs, but as they are member owned and non-profit they're a little tougher on defaults as they don't have the loss reserves the big banks have.

And knowing about CU cross-collaterization my Home Equity LOC is with Penfed but I have no other credit accounts with them, and my car loan is with DCU but I have no other credit accounts with them. I'm Semi retired and have very secure income - Social Security and a part time job with the local county, coming up on 7 years with them. So I'm not concerned about not being able to meet my personal finance obligations, but it's also best to keep things separate should the unlikely become the unexpected.

[Anonymous]

I did read in my car loan contract that filing bankruptcy would put me in default even though I've never been late on my car note. The paralegal said I could reaffirm the car it was my choice but the more I think about it Im still unsure. The balance on the loan is $15,000. My car note is $325 a month at 4.75% interest rate. The reason my payment is high is because of the trade in at the time of purchase added on to the loan made the payment what it is. I have a 2016 Altima and it has 84,000 miles. It's my only car. I'm open for suggestions.

[Anonymous]

Not to mention at mile 64000 I had to replace the transmission. Even though the paralegal gave me the okay I'm still undecided.

[Anonymous]

This is just my opinion and you have to do what you think is right.

That car needs to go in BK and you get another one. The car loan alone is more than the car is worth without adding the credit card on top of it. Plus, that car is most likely on its last leg anyway.

You'll have to pay higher interest on the newish car but if you do research on what cars (mileage, year,etc) can be refinanced later and factor those details into your new purchase, you can refinance in the future when your credit is better. OR you can buy a cheap car on craigslist and drive it until your credit is better. Even if you go craigslist route you're probably going to have a car as reliable as the one you have now.

As far as whether to make the payment or not, I wouldn't. You're getting the worst hit with the BK anyway. You discharge and rebuild like the rest of us and you'll be better for it.

The point of BK is to get out of the hole completely not keep part of the hole.