Does NFCU Cross Collateralize?

[showcsshop]

I have two CC's, LOC and Auto with NFCU.

 

BofA gave me the shaft and made my whole balance due for being 20 days late. So I am going to let it hit the curb, in the mean time I have had CLD's by many of the cards, so I was thinking of just not paying any of them.

 

I just want to make sure the vehicle stays current so my "car credit" is clean while I work to clean this stuff up again.

 

May end up doing a BK to assist in the cleanup since most would be with OC's.

 

If my cc's default will they take the vehicle even if it is on time?

[greywolf]

How is B of A calling your entire balance due? Did you have a renewable LOC option or something?

[more credit less cash]

Does NFCU Cross Collateralize?

 

I'm not sure, but they probably do.

[get.randy]

Read the fine print on your loan docs. Many CUs have inserted language that will allow them to pick up the car in a case like yours (where the car is paid and current, but the CCs are 30+ days late).

[centex]

OP also needs to be aware of the BK Court's tendency to frown on preferential treatment (ie payment)...expect a BK7 to be tossed on its ear and converted to a BK13 if it even survived to that point.

 

Curious about the real story on BofA...never seen then call a balance due for 20 days, although all other manner of AA SHOULD apply to the account.

[Lynn37]

Yes they do. A month or so ago some asked the same question because They were late on their NFCU card, and they (NFCU) were coming to repo the car her son was driving and paying for.

[bostonte]

Especially if this is his only car, the BK court is unlikely to have a preferential payment issue.

 

Not to say it's a good idea or won't cause other problems, but it's extremely common in BK cases to keep secured loans (car, house) current while defaulting on everything else.

 

I take issue with this statement from the op: "in the mean time I have had CLD's by many of the cards, so I was thinking of just not paying any of them."

 

So because they lowered your credit line you aren't going to pay them?

 

You have a pretty diverse portfolio of cards listed in your signature -- it's going to be tough to rebuild after you take all those issuers out. Many of them blacklist.

[craigg]

It's my understanding that all credit unions cross collateralize their accounts. Beyond that are you saying that with all the trades listed in your signature you can't do a balance transfer to pay off BOA? Do you plan on telling Navy Fed to just write off the $35K they lent to you? I highly doubt that they want your car unless there is substantial equity; however how many times do you plan to continue to put the screws to the banks? You list over $125K in revolving lines in your signature, have you tapped them all dry? No wonder the credit unions like Penfed are so cautious with so many having the attitude that they will just rinse and repeat.

[centex]

Especially if this is his only car, the BK court is unlikely to have a preferential payment issue.

 

Not to say it's a good idea or won't cause other problems, but it's extremely common in BK cases to keep secured loans (car, house) current while defaulting on everything else.

 

I don't view this as the usual set of circumstances. This is the classic abuse of the BK process being described...and the Court won't be happy about that.

[LBCS]

Especially if this is his only car, the BK court is unlikely to have a preferential payment issue.

 

Not to say it's a good idea or won't cause other problems, but it's extremely common in BK cases to keep secured loans (car, house) current while defaulting on everything else.

 

I don't view this as the usual set of circumstances. This is the classic abuse of the BK process being described...and the Court won't be happy about that.

 

 

I am not familiar with the bankruptcy process, but is this type of circumstance uncommon? I know many people in So Cal who have declared BK while staying current on their car.

Edited November 19, 2009 by LBCS

[centex]

Especially if this is his only car, the BK court is unlikely to have a preferential payment issue.

 

Not to say it's a good idea or won't cause other problems, but it's extremely common in BK cases to keep secured loans (car, house) current while defaulting on everything else.

 

I don't view this as the usual set of circumstances. This is the classic abuse of the BK process being described...and the Court won't be happy about that.

 

 

I am not familiar with the bankruptcy process, but is this type of circumstance uncommon? I know many people in So Cal who have declared BK while staying current on their car.

 

I've not heard stories locally of people in BK who decided they didn't like their card issuer's actions and just say 'eff it' and quit paying everything except the vehicle.

 

I have NO sympathy for people who are not in fiscal straits who just decide to walk away even though they COULD continue making ALL payments...

[chriswufgator]

OP also needs to be aware of the BK Court's tendency to frown on preferential treatment (ie payment)...expect a BK7 to be tossed on its ear and converted to a BK13 if it even survived to that point.

 

Curious about the real story on BofA...never seen then call a balance due for 20 days, although all other manner of AA SHOULD apply to the account.

 

Actually, since you mentioned it, BK is a great option here. The court will tell BOA to shove it on the acceleration, and will disallow NFCU's cross-default clause.

 

OP should consider this. Even if it get bumped to a 13, the court will still limit the fees & penalties the lenders assess, and you won't lose your car.

[chriswufgator]

Especially if this is his only car, the BK court is unlikely to have a preferential payment issue.

 

Not to say it's a good idea or won't cause other problems, but it's extremely common in BK cases to keep secured loans (car, house) current while defaulting on everything else.

 

I don't view this as the usual set of circumstances. This is the classic abuse of the BK process being described...and the Court won't be happy about that.

 

 

I am not familiar with the bankruptcy process, but is this type of circumstance uncommon? I know many people in So Cal who have declared BK while staying current on their car.

 

I've not heard stories locally of people in BK who decided they didn't like their card issuer's actions and just say 'eff it' and quit paying everything except the vehicle.

 

I have NO sympathy for people who are not in fiscal straits who just decide to walk away even though they COULD continue making ALL payments...

 

That describes most bankruptcies, Centex.

 

Sure people could continue making minimum payments that suck up 90% of their income for the next 100 years. Thankfully, the law allows for a fresh start.

[centex]

Especially if this is his only car, the BK court is unlikely to have a preferential payment issue.

 

Not to say it's a good idea or won't cause other problems, but it's extremely common in BK cases to keep secured loans (car, house) current while defaulting on everything else.

 

I don't view this as the usual set of circumstances. This is the classic abuse of the BK process being described...and the Court won't be happy about that.

 

 

I am not familiar with the bankruptcy process, but is this type of circumstance uncommon? I know many people in So Cal who have declared BK while staying current on their car.

 

I've not heard stories locally of people in BK who decided they didn't like their card issuer's actions and just say 'eff it' and quit paying everything except the vehicle.

 

I have NO sympathy for people who are not in fiscal straits who just decide to walk away even though they COULD continue making ALL payments...

 

That describes most bankruptcies, Centex.

 

Actions like the OP sets out? Where they were late and then just got pissed at their lender? And by 'got pissed,' I mean is actually contemplating giving the big fiscal middle finger to ALL lenders and not simply coming to websites and using cut-n-paste multi-colored text.

 

I guess I am glad I don't live in an area where that is viewed as an acceptable practice. The BK's I know of being handled locally were all cases where the outlay was clearly more than the income. In other words, they WERE tapping savings.

 

I miss the days where someone should be in dire straits in order to file a 7.

[Auto_Body_Chick]

I have two CC's, LOC and Auto with NFCU.

 

BofA gave me the shaft and made my whole balance due for being 20 days late. So I am going to let it hit the curb, in the mean time I have had CLD's by many of the cards, so I was thinking of just not paying any of them.

 

I just want to make sure the vehicle stays current so my "car credit" is clean while I work to clean this stuff up again.

 

May end up doing a BK to assist in the cleanup since most would be with OC's.

 

If my cc's default will they take the vehicle even if it is on time?

 

 

Maybe you should move your question to the BK forum. Someone there may be able to give you advice.

[johnnyt6]

I'm lost.

[chriswufgator]

Especially if this is his only car, the BK court is unlikely to have a preferential payment issue.

 

Not to say it's a good idea or won't cause other problems, but it's extremely common in BK cases to keep secured loans (car, house) current while defaulting on everything else.

 

I don't view this as the usual set of circumstances. This is the classic abuse of the BK process being described...and the Court won't be happy about that.

 

 

I am not familiar with the bankruptcy process, but is this type of circumstance uncommon? I know many people in So Cal who have declared BK while staying current on their car.

 

I've not heard stories locally of people in BK who decided they didn't like their card issuer's actions and just say 'eff it' and quit paying everything except the vehicle.

 

I have NO sympathy for people who are not in fiscal straits who just decide to walk away even though they COULD continue making ALL payments...

 

That describes most bankruptcies, Centex.

 

Actions like the OP sets out? Where they were late and then just got pissed at their lender? And by 'got pissed,' I mean is actually contemplating giving the big fiscal middle finger to ALL lenders and not simply coming to websites and using cut-n-paste multi-colored text.

 

I guess I am glad I don't live in an area where that is viewed as an acceptable practice. The BK's I know of being handled locally were all cases where the outlay was clearly more than the income. In other words, they WERE tapping savings.

 

I miss the days where someone should be in dire straits in order to file a 7.

 

The point of BK is to provide a fresh start for someone with an unreasonable debt load.

 

The point of the system isn't to shackle someone to their payments that consume every dime of their income for the next 100 years.

 

Pardon me if I don't see the rationale behind requiring them to lose everything they own and their savings before filing...

 

OP can see the writing on the wall. They know what's coming. File and get it over with before every lender has jacked the rates to 29.99%, drained their savings, and made it more difficult to come out the other end intact. This whole moral judgment of a credit default is ridiculous anyway, it's priced into the product. Why do you think they charge an interest rate?

[encoder]

Did you see the part where the OP gave as the reason for BK, the fact that his lenders have CLD'd him?

 

BK didn't arise as some altruistic way to give somebody a fresh start whose pissed that he got a CLD. It was to provide a legal alternative to going to a literal debt prison.

[cooliojones]

Thanks CB, I learned something today. Here's something for other people who may have been like me:

 

Cross-collateralization is a term used when the collateral for one loan is also used as collateral for another loan. If a person has borrowed from the same bank a home loan secured by the house, a car loan secured by the car, and so on, these assets can be used as cross-collaterals for all the loans. If the person pays off the car loan and wants to sell the car, the bank may veto the deal because the car is still used to secure the home loan and other loans. Technically, cross-collateralization expires when the borrower has no outstanding loans with the bank. In the context of bankruptcy, cross-collateralization also means the collateralization of general unsecured prepetition debt by collateral securing postpetition loans.

 

Wow. In a way, that sucks!

 

But from what I have read here about NFCU, they are a great TL, so I would be wary of making them upset. Has the OP tried TALKING with them to see if they can work something out, especially so early on like it is now?

[clutchcargo]

Does anyone know if this means any future debt also? Say you have a car loan and a CC with a balence. You pay both off and them off then, a year later, you charge something on your CC. Could you not sell your car with a CC bal?

[greywolf]

Yet another reason not to have all your ends in one proverbial basket. However, it is nearly impossible to predict going into BK, and ever having to worry about things like Cross Collateralization, etc.

 

I am not sure why OP thinks going into BK because some creditors CLDed him/RJed him is the best path. It isn't that i hope something is going wrong for you OP, I just don't see why you think BK is your best option. Have you tried negotiating with your current creditors? Many of them have hardship programs and such to help people.

 

BK is probably one of the worst things to go through, I would put it equal with divorce.

[chriswufgator]

Did you see the part where the OP gave as the reason for BK, the fact that his lenders have CLD'd him?

 

BK didn't arise as some altruistic way to give somebody a fresh start whose pissed that he got a CLD. It was to provide a legal alternative to going to a literal debt prison.

 

I think the real rationale here is probably the inevitable domino effect.

 

The CLD's will in turn cause maxed-out utilization numbers, which will lead to ratejacks, leading to increased interest payments, and starting an inevitable downward spiral. Yes, the OP is upset that the lenders CLD's him, but the real issue here is the inevitable domino effect that results. I think the OP may be wise for grabbing the bull by the horns when the thing just gets going, rather than waiting until the lenders have sucked every last drop of blood before putting a stop to it.

 

I guess I'm having faith in the OP here. If that really isn't what's going on, and this really is 100% about the CLD's and nothing else, then yeah...that's an ethical problem. But CLD's don't just happen in a vacuum, there are side-effects that usually lead to a larger downward slide.

[chriswufgator]

BK is probably one of the worst things to go through, I would put it equal with divorce.

 

Most people wait until it's their only choice, rather than using it to restructure their debt load without destroying their entire lives first.

 

I really don't get all this moral judgment attached to the consumer BK process. Out of the 5 largest credit card lenders at least 3, more probably 4, wouldn't be here today without having received huge government loans and/or TARP equity infusions. The only one that wasn't technically insolvent was Chase.

 

Granted, we're discussing NFCU here, and they do have their financial house in order, but my point still stands. These companies restructure in bankruptcy (or receive bailouts) whenever necessary, and nobody holds it against them as though they're some perpetual deadbeat for the next 1000 years.

 

I seriously question the double-standard.

[jlp58]

This whole moral judgment of a credit default is ridiculous anyway, it's priced into the product. Why do you think they charge an interest rate?

 

I agree, it is priced into the product. And paid for by all customers, not just the ones who get themselves into trouble. In the same way that insurance premiums are higher because some people don't make smart lifestyle choices or deliberately abuse/defraud the healthcare system. In the same way that a portion of all (reported) income goes to fund government assistance for people who deliberately abuse/defraud the welfare system.

 

Moral issues, all, IMO.

[chriswufgator]

This whole moral judgment of a credit default is ridiculous anyway, it's priced into the product. Why do you think they charge an interest rate?

 

I agree, it is priced into the product. And paid for by all customers, not just the ones who get themselves into trouble. In the same way that insurance premiums are higher because some people don't make smart lifestyle choices or deliberately abuse/defraud the healthcare system. In the same way that a portion of all (reported) income goes to fund government assistance for people who deliberately abuse/defraud the welfare system.

 

Moral issues, all, IMO.

 

The people who feel they're unfairly paying for someone else's bad decisions are always free to not do so, right? It's a free market.

 

I know of no law that requires someone to carry a balance or pay interest, or even to have a credit card to begin with.

 

Additionally, that logic is a little flawed, because it presumes that any savings from lower default rates would be passed right back to the customers, and that just doesn't happen in the real world. In real life, the companies would start handing out self-congratulatory bonuses, buy another corporate jet, raise the shareholders' dividend, or whatever else.

 

Lowering product pricing usually isn't on the list.