I have a client who filed Chapter 7 bankruptcy. He has 8 debts with United Federal Credit Union – a credit union I was unfamiliar with until this case. The debts are: first and second mortgage, motorcycle loan, truck loan, and 2 unsecured lines of credit. The credit union is taking the position that unless my client reaffirms on all of the loans he will not be able to keep his vehicles regardless of whether he pays for them. Of course I cannot/will not sign a reaffirmation of the unsecured debts. I don’t think the CU can cross-collaterize the home without giving TILA disclosures. As for the motorcycle, assuming they have a valid cross-collaterization clause, there really would not be any equity in the motorcycle because all the other loans are collateralized by the motorcycle. He could redeem the motorcycle free and clear of any liens by paying the value of the motorcycle. If CU won’t play ball, convert to a Dallas bankruptcy chapter 13 and cram-down. More than likely will pay unsecureds next to nothing anyway.
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