QUESTION
What rights do we have to prevent the credit card company from tying the credit card balance to the car loan?
Asked on Mar 23rd, 2013 on Bankruptcy - Florida
More details to this question:
My wife filed bankruptcy over 2 yrs ago. She has been paying for her car loan. She had a credit card along with a car loan at the credit union. In the bankruptcy court, she agreed to pay the car loan, not the credit card. Her lawyer and the credit union lawyer were present at the hearing. She received a call from a tow service that they needed pick up her car. She called the credit union to inquire why they were picking up her car. They informed her that it was for non-payment on her credit card. There has been no notification from the credit union that she was required to pay on the credit card account, after the bankruptcy, decision 2 years ago. Credit union is trying to tie the credit card balance to the car loan. What rights do we have to prevent this from happening?
7 ANSWERS
You may wish to consult a lawyer to help determine whether the credit card and auto loan were cross-collateralize, which is common - especially with credit unions. If that is the case, there may not be much you can do.
Answered on Apr 03rd, 2013 at 8:56 PM
Commercial Bankruptcy Attorney serving Davie, FL
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Law Office of Jeffrey Solomon
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You should look at the reaffirmation agreement carefully that you filed with the court. However, the problem is that it is common practice that credit union loan agreements have cross-collateral agreements, meaning essentially that all loans are secured by all other loans. This is a major reason that reaffirmation agreements are dangerous as to credit unions unless you are careful as to what is being reaffirmed and the amount in the reaffirmation agreement. But even if you had not reaffirmed, due to the cross collateral agreement, the credit union could still pick up the car for not paying the credit card.
Answered on Mar 26th, 2013 at 2:24 PM
2 Awards
You need to bring it before the bankruptcy court. You need to have someone review the reaffirmation agreement you signed. If it ties the credit card account with the vehicle loan then you'll be forced to pay it but could probably get the bankruptcy court to help you revise the payment schedule.
Answered on Mar 26th, 2013 at 2:37 AM
Bankruptcy Attorney serving Phoenix, AZ
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Law Office of D. L. Drain, P.A.
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She needs to talk to her bankruptcy attorney. What you are describing is a cross-collateralized debt. Most likely this issue was deal with in the reaffirmation agreement.
Answered on Mar 25th, 2013 at 4:17 PM
Deborah F. Bowinski
Your wife should call her bankruptcy lawyer. Almost certainly the credit union accounts have "cross-collateralization" provisions which basically say that anything securing one account also secures all accounts. If she signed a reaffirmation agreement the terms of the loan and her post-bankruptcy obligations will be spelled out in that document. If she didnt sign a reaffirmation agreement then the credit union's rights, and whether the cross-collateralization provisions are enforceable, will be determined by state law.
Answered on Mar 25th, 2013 at 4:16 PM
Bankruptcy Attorney serving Plantation, FL
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Moffa & Breuer, PLLC
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This is a common problem when dealing with credit unions. Most, if not all, credit unions have what is known as cross collateralization agreement with members, like yourself. These cross collateralization agreements tie ALL LOANS, including credit cards to the vehicle loan and even though the vehicle loan may be paid, the credit card is ALSO secured by the vehicle and must be paid in order to fully pay off the vehicle loan. I suggest that you review the loan documents and discuss this with your attorney who may not be award of this. Find out what your attorney can do to help remedy this situation.
Answered on Mar 25th, 2013 at 4:16 PM
Bankruptcy & Debt Attorney serving Syracuse, NY
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Theodore Lyons Araujo
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If the vehicle was cross collateralized under a loan liner agreement and you did not get the bank to waive the security when you signed the reaffirmation agreement you cannot now strip the lien.
Answered on Mar 25th, 2013 at 4:16 PM