Credit Union holding car as collateral for an unsecured loan.
I had a car financed through my local credit union. I payed the balance off 2 months ago. When I requested the titile, they claim that I recieved a $10,000 unsecured loan in 2006. I had some medical issues and have ended up in an extended care facility. My income is basically zero dollars now with my children providing for my needs. Now the credit union is holding my title for payment of the unsecured loan. Can they hold the car as collateral for the unsecured loan?
Can they hold the car as collateral for an unsecured loan?
—Bertha
Given the detail you provided, the credit union appears to be unable to release the car title to you because you have an outstanding personal loan with the same credit union that you have fallen behind in payments with. Is that what is happening?
Credit unions often have cross collateral protections in their loan products with their members. If my understanding of your question and what is happening is correct, it is fairly common.
There are not many options, especially when you have no income. Do you have other outstanding debts other than the 10k loan? If you can give me some more details about your debt situation I may be able to provide additional feedback.
Anyone with questions or concerns about cross collateral loan products at your credit union can post in the comments below for feedback.
About Michael BoveeMichael started CRN in 2004 with a mission to provide people in need with detailed debt and credit help and education. Michael has participated as an expert panelist in federal consumer protection rule making, collaborated on state law changes governing debt consolidation, has worked as an expert witness in court matters related to the debt relief industry. He is available to speak with you about your financial struggle and helps people resolve their debt problems daily.
We have an interesting predicament. My dad and I had a car loan with a CU that has been paid off. While we were still making payments, our business took a LOC with the CU. Non secured, but our names were on it as officers, of course, but all info was listed under business name. We did default on the LOC and ended up closing business. CU has cancelled the debt at this point, however, won’t issue title to vehicle claiming we owe. Is this legal considering one debt was personal and the other business as well as the fact that they cancelled the debt already?
I would talk this over with an experienced debt collection consumer law attorney in your state. You can find some using the drop down menus here: https://www.consumeradvocates.org/find-an-attorney