Cross Collateral

[slmac]

What is the name of your state?What is the name of your state? PA

My husband has a car loan through the Credit Union and after being late on the payment (2 actually) they repossessed the vehicle. When he signed the papers for the loan originally, there was a cross collateral clause in the loan. He also has an unsecured loan with them for $4000. Here's the problem: He can get the vehicle back by paying it off, but... they also want the unsecured loan payed off too before they will give him the vehicle back. Is this legal?

 

[Ladynred]

Unfortunately, yes. That is EXACTLY why CU's use cross-collateralization clauses to begin with. If you can't pay it ALL off, both accounts, you might as well just let the car go, it is unlikely they will budge, he signed agreeing to all the terms. This tactic is also how they prevent people from having debts to them discharged in bankruptcy. If it has a cross-collateralization clause in it - don't sign it !