I owe $6500 on my 2004 Honda CRV and $2800 on a 2000 Toyota Corolla. The creditor is a credit union. I also owe $8800 on a credit card to the same credit union. Tthe credit union says they will repossess the cars for their retail value to help pay the credit card debt. They say that if I want the cars I have to pay their retail value plus the credit card balance which I am unable to do.
The Honda retails at between $10,00 and $12,000. The Corolla retails at about $4000. Apparently, Ohio Chapter 7 has a vehicle exemption of $3200. If I were to add the $3200 to my $6500 blance I would get $9700. However, the Honda needs about $4000 in repairs. Can I add the repairs to the cost of the car?
You need to talk to your Bankruptcy attorney. If you want to keep your cars, you have to pay the value of them. You can usually discharge any amount owed that is greater than the value of the car. You can also reaffirm your debt with the lenders, but the credit union may not work with you on that since you're causing them a loss on the credit card. Either way...talk to your Bankruptcy attorney. Almost anything you do will have to go through the bankruptcy court.
Your credit union is using a cross collateralization theory. If you want to keep the car then you should sign a reaffirmation agreement with the credit union ONLY for the amount owed on the car and not the unsecured debt. In CA, the credit unions huff and puff that they are going to repossess but never do.
Mr. Larkin is licensed to practice law in CA and is located in San Diego. His response here does not constitute legal advice and does not create an attorney/ client relationship. The response is in the form of legal education and is intended to provide general information about the matter in question. Many times the questioner may leave out details which would make the reply unsuitable. Mr. Larkin strongly advises the questioner to confer with an attorney in their own state to acquire more information about the specifics of their case.