Beware of Cross Collateralization Agreement with Credit Unions

Posted by admin on June 22, 2010 under Uncategorized | 566 Comments to Read

An issue that often times comes up with Credit Unions is cross-collateralization agreements. Most debtors are unaware of the fact that if they take out a car loan with a credit union and a personal loan with the same credit union the credit union will usually in the small print have a dragnet clause or cross-collateralization agreement that will make the unsecured personal loan secured by the automobile as well. That means that if you are keeping the car current because you want to reaffirm the debt and keep the car but not making payments on the personal loan they could still try and take the car as collateral for the defaulted personal loan. Make sure if you are filing for bankruptcy and have mutiple loans with a credit union you speak with an attorney about this as he or she can advise you on how best to deal with the matter or negotiate with the credit union as to the cross-collateralization agreement.

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